Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH WATERWAYS BILL [Lords]

Motion made, and Question proposed,
That the Promoters of the British Waterways Bill [Lords] may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
That, if the Bill is brought from the Lords in the present Session, the Agent for the Bill shall deposit in the Private Bill Office a declaration signed by him, stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session;
That as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be deemed to have been read for the first and second time and committed (and shall be recorded in the Journal of this House has having been so read and committed);
That all Petitions relating to the Bill presented in the last Session which stand referred to the Committee on the Bill, together with any minutes of evidence taken before the Committee on the Bill, shall stand referred to the Committee on the Bill in the present Session;
That no Petitioners shall be heard before the Committee on the Bill, unless their Petition has been presented within the time limited within the last Session or deposited pursuant to paragraph (b) of Standing Order 126 relating to Private Business;
That, in relation to the Bill, Standing Order 127 relating to Private Business shall have effect as if the words "under Standing Order 126 (Reference to committee of petitions against Bill)" were omitted;
That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the last Session.—[The First Deputy Chairman of Ways and Means.]

Hon. Members: Object.

Oral Answers to Questions — NORTHERN IRELAND

Economy

Mr. Parry: To ask the Secretary of State for Northern Ireland when he next expects to meet the Irish Congress of Trade Unions to discuss the economy.

The Minister of State, Northern Ireland Office (Mr. Robert Atkins): I met a delegation from the Northern Ireland Committee of the Irish Congress of Trades Unions to discuss the economy in May. Neither my right hon. and learned Friend nor I have received requests for a further meeting.

Mr. Parry: When the Minister next meets the ICTU, will he congratulate the trade union movement in Northern Ireland on organising huge and safe demonstrations for peace in the Province? Will he also state when the Government will publish their proposals on policy appraisment and the fair treatment paths?

Mr. Atkins: I join the hon. Gentleman in his congratulations. As a former president of the Conservative Trade Unionists, I, too, have an interest. I offer deep support for the trade unionists in their activities in Northern Ireland, not least for the event to which he referred, which was a solid and impressive demonstration by a wide variety of working people expressing their desire for peace to be achieved and for the problems to be resolved. I hope to be able to say something about the hon. Gentleman's special point in the not-too-distant future.

Mr. William Ross: Does the Minister agree that not only members of trade unions but many other people in Northern Ireland are concerned about the training and retraining of people of all ages in the Province? When he next meets the trade unions, will he explain why money seems to be diverted from community workshops, which are badly run down in many parts of the Province, to private training agencies that apparently do little other than redirect people to colleges of further education?

Mr. Atkins: The hon. Gentleman is being untypically unfair about some of the great work that has been done by a number of the organisations to which he refers. It is fair to say that, pleasingly, an increasing number of young people wish to stay on at school to get qualifications of one sort or another, but the numbers using some of the training facilities have declined. We have made it clear that we will honour the commitment to provide every youngster with a training place and I am determined to ensure that that occurs.

Mr. Stott: Will the Minister, during his discussions with Terry Carlin of the Northern Ireland trade union movement, explain how the Budget will help the economy in Northern Ireland, given that a typical family will pay £10 a week more in tax next year, which will rise to £16 a week more by April 1995? Is the hon. Gentleman aware that those tax increases, coupled with the new taxes on house and car insurance and on holiday travel, not to mention VAT on fuel and the freezing of personal


allowances, will drastically reduce people's purchasing power? Is not it self-evident that those measures will have a detrimental effect on the economy in Northern Ireland?

Mr. Atkins: I should have thought that if I were to discuss matters with Mr. Carlin along those lines, I might find perhaps not his agreement, but his acceptance of the fact that, had the Labour party been elected, his members would have been worse off than they are now as a result of one of the most difficult recessions in recent years, which the United Kingdom is pulling out of faster than anyone else, leading the rest of Europe. I suspect that as Mr. Carlin is a fair and reasonable man, he would understand that point.

Employment

Mr. Trimble: To ask the Secretary of State for Northern Ireland if he will make a statement on the effect of the MacBride principles on employment in Northern Ireland.

Mr. Atkins: The comprehensive Fair Employment (Northern Ireland) Act 1989 provides a vigorous and effective framework for achieving fair employment. The MacBride principles are unnecessary and inadequate as they do not advocate investment, without which the achievements of fair employment would be more difficult. It is impossible to quantify the negative effect of the MacBride campaign.

Mr. Trimble: I agree with all the criticisms that the Minister made of the MacBride principles, but it would be helpful if he got in touch with all the public authorities in the United States that foolishly adopt those principles and pointed out that in Northern Ireland more than 60 per cent. of employees are Protestant, yet according to aggregate employment in American firms to which the MacBride principles apply, only 55 per cent. of employees are Protestants, showing a significant imbalance.
Will the Minister also point out that the firm with the worst employment record is the American firm, United Technologies, in the constituency of the hon. Member for Foyle (Mr. Hume), where out of 737 employees, fewer than 10 are Protestant. Will the Minister point out to the public authorities in the United States that if they are to take action to achieve fair employment, they could begin on those terms?

Mr. Atkins: I am grateful to the hon. Gentleman for his tacit support. I suspect that the proverb of mote and beam has a part to play here. My task and that of all Northern Irish Members is to ensure that any state or city of the United States that has companies that we wish to encourage to invest in Northern Ireland is persuaded by us, by the House and by our ambassador and his staff in the United States that the Fair Employment (Northern Ireland) Act is one of the most rigorous of its type anywhere in the world. All that MacBride has done is to make life difficult for American companies that wish to invest in Northern Ireland, knowing as they do that it is such a fine place with such a fine work force.

Mrs. Ann Winterton: Will my hon. Friend make the strongest representations to the Clinton Administration to remove the outdated MacBride principles? Will he assure them that the best way to help the Province is to strengthen its economy by investment and by increasing employment?

Mr. Atkins: My hon. Friend puts her finger on the matter succinctly. It is true that President Clinton, as a candidate and as President soon after his election, made it clear that he supported MacBride. However, I know that the good work being done by our ambasssador and visits such as those carried out by Northern Ireland Members have made the position on MacBride and our Fair Employment (Northern Ireland) Act much clearer to representatives of the United States Administration. Their support in these matters is to be welcomed.

Dr. Hendron: Will the Minister accept that it is the rhetoric of MacBride rather than the principles which could lead to disinvestment in Northern Ireland?

Mr. Atkins: Indeed. The hon. Gentleman, who played such a significant part, along with his colleague in this context—the hon. Member for Belfast, North (Mr.Walker) —on their recent trip, again puts his finger on the problem. It is the campaign and the people asssociated with it rather than the substance which is causing the problem. Anything that any hon. Member can do when visiting the United States will be much appreciated by everyone in Northern Ireland.

Schools

Mr. Harry Greenway: To ask the Secretary of State for Northern Ireland how many children of primary and secondary school age are in what number of schools; what is the average class size in primary and secondary schools: and if he will make a statement.

The Secretary of State for Northern Ireland (Sir Patrick Mayhew): At October 1992, there were 185,626 pupils in 983 primary schools and 145,512 pupils in 234 secondary schools. The average class size in primary schools was 24·9 pupils. Information on class sizes is not collected for secondary schools.

Mr. Greenway: Is my right hon. and learned Friend aware that the quality of education in Northern Ireland is, rightly, highly renowned throughout the United Kingdom? Is he further aware that although excellence in education does not necessarily depend on class size, the class sizes in primary schools which he has mentioned are a matter for congratulation?

Sir Patrick Mayhew: I am grateful to my hon. Friend, with his professional and lifelong experience of education, for what he says and for his tribute to the quality of education in Northern Ireland. It has the best rates for A-levels for those leaving school, so my hon. Friend's tributes are well deserved. Class size is a helpful indicator, but, as he rightly says, it is the quality of teaching rather than the size of schools which is the primary determinant of results.

Mr. Beggs: Does the Secretary of State agree that children who have had the benefit of a good nursery education are more likely to realise their full potential as they proceed through primary and secondary schools? Will he undertake to review the current low level of provision of nursery education places in Northern Ireland? Will he seek to make funding available to the boards so that they can increase nursery school places? Will he also take account of the importance of the early diagnosis and


recognition of children with special educational needs, and will he seek to encourage earlier identification and additional remedial assistance for those children?

Sir Patrick Mayhew: I very much agree with the hon. Gentleman on what he says about the importance of nursery education. It is easy for a child from a deprived home or with particular difficulties to join the losers' club if he or she gets to school, finds that he or she cannot keep up and resorts therefore to the truculence and disagreeable behaviour with which we are all familiar.
The overall proportion of three and four-year-olds in nursery education in Northern Ireland—46 per cent.—is broadly in line with that in England and Wales. That is something which we wish to improve. I should like to write to the hon. Gentleman about the latter part of his question.

RUC (Personal Security)

Mr. Brazier: To ask the Secretary of State for Northern Ireland what steps are being taken to improve the personal security of part-time members of the Royal Ulster Constabulary and the Royal Irish Regiment.

The Minister of State, Northern Ireland Office (Sir John Wheeler): Measures to safeguard the personal security of police officers and soldiers in Northern Ireland are in place and kept under constant review. It is not in the public interest to discuss specific items or cases.

Mr. Brazier: Yes, indeed; but on this day, when another soldier has been killed in Ulster, I put it to my right hon. Friend that part-time soldiers, policemen and their families suffer the greatest risks of all. The attrition that they have suffered is the main cause for the sharp and continuing decline in their numbers.
Is not the best way to improve their security and that of everyone in Ulster to get the terrorists behind bars? To that end—as with the criminal justice legislation—there must be ways of ensuring, through disclosure and other measures, that a higher proportion of terrorist prosecutions in Ulster results in such men going behind bars at the end of trial.

Sir John Wheeler: I am grateful to my hon. Friend. He referred to the tragic killing today of a young soldier in Northern Ireland. I know that the whole House will wish to extend its sympathy to the family of that young man. My hon. Friend is right to say that the care of those who volunteer to serve in the Royal Ulster Constabulary reserve and the Royal Irish Regiment as part-time soldiers is very important. We owe them a great debt.
The fact that so many people in the part-time Royal Irish Regiment are able to make themselves available for duty every third day is a great credit to them and their families. I can assure my hon. Friend that every care is taken of them. I visited the Royal Irish Regiment yesterday and saw the arrangements for the care of those part-time soldiers and their families. I am pleased to tell the House that it is of the highest order. The point that my hon. Friend makes about reviewing the law is a matter that the Government have under constant review.

Rev. William McCrea: Although I join the hon. Member for Canterbury (Mr. Brazier) in offering sympathy to the family of the young soldier, it is important that the safety and security of my constituents along the border should also be of the highest order. Has the Minister

received any communication about the fact that, at 4 o'clock last Saturday, on the Kilcleen border in United Kingdom territory, a constituent of mine, who is a member of the security forces, was stopped and questioned by the Garda Siochana and asked for details concerning his comings and goings?
My constituent told the officer that he was not answerable to the Garda when in the United Kingdom. When my constituent told him that it is not a united Ireland yet, the officer said, "It is near enough." That situation is despicable in the United Kingdom. It is totally unacceptable and is putting fear in my constituents. Unfortunately, although the House condemned the soldier's death today, there will be someone from the Government speaking to the murderers tomorrow.

Sir John Wheeler: I have no knowledge of the incident to which the hon. Gentleman refers. I take note of what he says and, if he gives me further details, I will have the matter investigated. I can tell the House that co-operation between the Royal Ulster Constabulary and the Garda Siochana has never been greater.

Rathlin Ferry Service

Mr. Peter Bottomley: To ask the Secretary of State for Northern Ireland if he will make a statement on the Rathlin ferry service.

Mr. Atkins: The Government are committed to a safe and comfortable Rathlin ferry service. We have grant-aided Moyle council for safety works at Ballycastle and Rathlin harbours and have provided subsidies to the ferry operators. Major harbour works are required for a modern ferry service, but resources for those works will be considered along with other requirements against necessarily limited resources.

Mr. Bottomley: I ask this question about north Antrim with the agreement, and blessing, of the hon. Member for Antrim, North (Rev. Ian Paisley), in his absence. Does my hon. Friend agree that it is wrong that, year after year, the necessary moneys to provide safe harbours at each end of the ferry service are cancelled from the estimates? Is it not about time that there was a firm commitment so that both the residents of, and the visitors to, this historic island can get on and off their boats in safety?

Mr. Atkins: I know that my hon. Friend takes a close interest in Rathlin island and is still famed on the island for his involvement there when he served in the Province. I share with him and the islanders the concern about the lack of resources, but he will know that we have undergone a difficult public expenditure round and finances are tight. It is in my mind to do something about that as soon as we can, not least because my right hon. Friend the Secretary of State for Scotland also has an interest in a route that might exist from Campbeltown to Rathlin and Ballycastle. However, resources are simply not available at this stage.

Mr. A. Cecil Walker: As the Minister responsible for another form of ferry service, will the hon. Gentleman tell us when he hopes to publish the taxi review, which has been with his office for some time?

Mr. Atkins: The hon. Gentleman is ingenious, but he makes a fair point. It is one which my right hon. and learned Friend and I have been looking at in some detail.


I am conscious of the urgency of the matter and of the concern that the hon. Gentleman has represented to me and others, and we are doing our level best to produce something soon.

Ms Hoey: The Minister will be aware that there has been great delay in advertising for a teacher for the home tuition unit on Rathlin island. When will that post be advertised? Does he agree that if it is the Department's aim to increase the number of integrated schools, Rathlin island would be a wonderful place to set an example? It is the only place in Northern Ireland where people of all faiths are buried together. Should we not be trying to get an integrated school there?

Mr. Atkins: Not only are people buried together, but they live together, and in this context that is perhaps more important. The hon. Lady raises a fair point. As she will know, I am not responsible for education, but I have taken the liberty, thanks to her, of making some inquiries. There has been no request from the island for an integrated school and that is the most fundamental factor, but my hon. Friend the Member for Devizes (Mr. Ancram), the Under-Secretary of State who looks after education matters, and I in general terms will look at the matter closely to see what can be done to follow through the point which she raises.

Health and Social Services Boards

Rev. Martin Smyth: To ask the Secretary of State for Northern Ireland how many managers and administrators there were in the four health and social services boards on 1 January 1990, and in the designated trusts and boards on the most recent date available.

Sir John Wheeler: On 1 January 1990, there were 5,789 managers and administrators employed in the four health and social services boards. On 30 September 1993, there were 7,190 managers and administrators employed in the four boards in the HSS trusts.

Rev. Martin Smyth: I welcome that answer, but it conflicts with an answer given in Hansard on 25 November. Will the Minister accept that there is some discrepancy in the provision of care in Northern Ireland when, as is shown in that answer, between 1990 and 1993, there was an increase of 11·3 per cent. in the number of administrators and of 91 per cent. in the number of managers and a decrease of 11·3 per cent. in the number of nurses and midwives? Does he agree that managers and administrators are not able to give hands-on care?

Sir John Wheeler: I am grateful to the hon. Gentleman. As he says, there has been an increase, but that is linked to the growth in finance, personnel and information technology staff. The part played by the administrators and managers in the care of patients has resulted in the number of patients waiting for two years or more for in-patient treatment being reduced from 5,277 to 1,332, a reduction of 75 per cent. Those administrators play an important part in the health care programme for Northern Ireland and relieve the medical and paramedical people of a responsibility for bureaucracy and administration.

Tourism

Mr. Ian Bruce: To ask the Secretary of State for Northern Ireland if he will make a statement on the latest figures for tourism in Northern Ireland.

Mr. Atkins: The latest figures available are for 1992, when 1·25 million visitors came to Northern Ireland, representing an increase of 6 per cent. over the previous year. This was the fourth successive annual increase in visitor numbers, which is highly encouraging set against the background of a difficult year for the tourist trade worldwide.

Mr. Bruce: Will my hon. Friend send our congratulations to all those involved in the tourism industry in the Province for maintaining their traditional welcome? Will he tell the House what more can be done to promote this excellent industry and to increase the benefits gained from tourism in the Province?

Mr. Atkins: I am grateful to my hon. Friend, and I join him in congratulating the chairman of the Northern Ireland tourist board, Hugh O'Neil, together with all members of his board. They have done a tremendous amount of work to ensure that tourism—the fastest growing industry in the western world—goes from strength to strength in Northern Ireland. There is more that we can do in terms of resources and commitments, and we are trying so to do. Above all, we need to get across—as we are doing —the positive message about Northern Ireland being "the place you will never know unless you go." The more that we promote Northern Ireland in the House, the more visitors will come and the more profit will be gained for those in Northern Ireland.

Mr. Clifford Forsythe: The Minister will be aware that good travel facilities are necessary for tourists in Northern Ireland. Will he tell the House what steps he will take, or has taken, to sort out the infighting which is apparently taking place between not only the airports in Northern Ireland but the airlines there? It will lead to a lack of confidence about the travel facilities in Northern Ireland.

Mr. Atkins: The hon. Gentleman speaks with great authority on airport matters because he has an airport in his constituency. I take slight issue with him on his last sentence—that this will harm the tourist industry. It is clear that competition among airlines and airports can only be good for the traveller because, we hope, it will reduce costs and make things more attractive over a period. The point that the hon. Gentleman raises about differences of opinion interests me. They are not directly a matter for me, except in so far as it affects my custodianship of Aldergrove airport, albeit temporarily.

Mr. Viggers: I take pleasure in the fact that 1992 was the fourth year of growth in the Northern Ireland tourist business. Does my hon. Friend agree that it is important that Northern Ireland and the Republic of Ireland co-operate on tourism, particularly as it is supported by the International Fund for Ireland and European Community funds?

Mr. Atkins: It would be fair to record that my hon. Friend probably started the increase in tourism when he was a Northern Ireland Minister and, to that extent, its roots lie with him. I agree with what he said. We must attempt to get the message across to those who wish to


come to the island of Ireland that they can travel north and south and enjoy excellent facilities. Discussions that the tourist board is having with Bord Failte from the south are aimed at doing that. For example, the Erne-Shannon waterway crosses the border and is of mutual interest. It is something which people are keen to see when they come to Northern Ireland.

Mr. McGrady: I certainly accept that the Minister is deeply committed to the development of tourism in Northern Ireland. Does he agree that one important aspect is to provide the necessary infrastructure so that we can leap forward, as it were, when peace breaks out? Is the Minister aware that a quango appointed by the Government, the Northern Ireland Museum Council, has made direct representations to Brussels? That has frustrated applications made for funding there for several flagship developments for tourism. Is the Minister aware of that and does he agree with it—and if not, what action does he propose to take to indicate to the Brussels Commission that that is not the attitude or feeling of the people of Northern Ireland or of his Department?

Mr. Atkins: I agree with the hon. Gentleman that Northern Ireland has some fine museums, not least the one in his constituency with which I have been privileged to be associated. I am not aware of the detail to which he referred. I must investigate the matter and I promise that I will write to him. If he has further information that I ought to have, I should be grateful if he would talk to me later.

Mr. William O'Brien: I agree with the Minister and with other hon. Members that tourism is most important to Northern Ireland. It mainly comprises small businesses, which compete for a share of the market. I agree with the Minister that the Northern Ireland tourist board brings together both the private and the public sector to develop tourism. Does the hon. Gentleman agree that what is required now is for the national heritage section of his Department to work with the Northern Ireland tourist board and the local authorities—which, with their limited resources, promote tourism—to make available through the Northern Ireland Office details about arts, culture, historic buildings, music, museums and so on, as that would help to give tourism in Northern Ireland a boost? Will the hon. Gentleman take that suggestion on board and act so that we can further stimulate tourism in Northern Ireland?

Mr. Atkins: There are many documents which pull together the concerns to which the hon. Gentleman draws attention. As I would expect of him, he has come up with a very good idea. I shall certainly consider it and draw it to the attention of the bodies that can best implement it.

Inter-party Talks

Mr. Burden: To ask the Secretary of State for Northern Ireland if he will make a statement on progress towards the resumption of the inter-party talks, and on talks that he has had with the Irish Government.

Sir Patrick Mayhew: The Parliamentary Under-Secretary of State, my hon. Friend the Member for Devizes (Mr. Ancram), is engaged in private discussions to explore the basis on which the parties can come together for further dialogue. My right hon. Friend the Prime Minister has recently met the four main constitutional party leaders.

Additionally, we are in discussion with the Irish Government on matters of mutual interest, including constitutional issues. It remains our objective to return to multilateral talks involving the two Governments and the four main constitutional parties at the appropriate point.

Mr. Burden: Given article 1 of the Anglo-Irish Agreement, will the Secretary of State tell the House plainly whether he accepts that the Irish people have a right to national self-determination, based on consent freely given—north and south?

Sir Patrick Mayhew: I think that the Anglo-Irish Agreement speaks for itself. What is of most immediate importance to those concerned for stability, in Northern Ireland in particular, is that it should be thoroughly understood, as the Prime Minister has made it abundantly clear, that the British Government—the Government—stand firmly behind the democratic wishes of the people of Northern Ireland as regards the constitutional status of Northern Ireland.

Sir James Kilfedder: Does the Secretary of State accept that it would be a great mistake for the media or anyone else to interpret the present yearning for peace as a movement for appeasement at any price? Does he not agree that the majority of Ulster people want peace, political progress and the best of relations with the Irish Republic, but not at the cost of weakening their position within the United Kingdom?

Sir Patrick Mayhew: That is absolutely right. As my hon. Friend said, we went into the matter with some care on Monday. There is an overwhelming demand, as well as a yearning, for peace—but not, as I endeavoured to say on Monday, at any price. Peace properly attained is what people require and that is what the Government and all people of good will are striving to help the people of Northern Ireland to attain.

Mr. Molyneaux: In response to any inquiries from foreign parts, will the Secretary of State explain clearly that those conversations and informal discussions being so ably pursued by the Parliamentary Under-Secretary of State, the hon. Member for Devizes (Mr. Ancram), have the aim and object of restoring accountable democracy to all the people of Northern Ireland and that that is a necessary first step to restoring stability and subsequently peace?

Sir Patrick Mayhew: I am grateful to the right hon. Gentleman for his well-deserved tribute to my hon. Friend the Member for Devizes. My hon. Friend has made good progress with those with whom he is talking in the bilateral discussions. There is a good measure of agreement on the need for new political institutions in Northern Ireland. Those institutions are essential if democratic accountability is to be restored, and everyone recognises that that would be a good thing.
I am not sure that I would agree with the right hon. Gentleman in saying that that is the first requirement. I believe, as I have just said, that the first requirement for the restoration of stability in Northern Ireland is for everyone to accept beyond question that the democratically expressed wishes of the people of Northern Ireland will determine their future status.

Mr. Peter Robinson: Will the Secretary of State tell the House why, at a press conference in Northern Ireland on Sunday, he said that he had only recently learnt of some


unapproved contacts on a face-to-face basis between British Government officials and the IRA, when the documents that he supplied to the Library indicate that he knew back on 10 May? Why did the Secretary of State tell the press conference that they did not form part of the process that the Government were having with the IRA when they formed part of at least three of the messages?
The right hon. and learned Gentleman persists in saying that they were unapproved contacts. Why did he never at any stage after he was made aware of them indicate to the IRA that it was talking to loose cannons? Is it not about time that the Secretary of State came clean? Has he not stretched credulity beyond breaking point?

Sir Patrick Mayhew: I said at the press conference that I gave on Sunday in Northern Ireland that it had recently come to our notice that there had been an unauthorised meeting between somebody of official status and a member of Sinn Fein. The reason I said that was because it was true. It had come to our notice—that there had been an unauthorised meeting—something like 10 days or perhaps a couple of weeks previously.
We also learned that some three years ago there had been—or probably had been—a meeting with somebody of similar status in the circumstances which were probably described by Martin McGuinness recently. That happens to be the case. I want to make it clear that there is no question of there being anybody who is authorised to conduct talks or negotiations with Sinn Fein or the IRA, or with any other organisation that either perpetrates or justifies the use of violence.

Mr. Alton: Will the Secretary of State repeat the Prime Minister's recent comment that this still remains the best opportunity for peace? Does the right hon. and learned Gentleman agree that the participants in the middle east process—which is so often cited—were not subjected to the full glare of media speculation or to leaked documents, and were helped by the presence of an independent arbiter? Can not we learn from that process?

Sir Patrick Mayhew: It is only a partially apt analogy, because the middle east process was one of negotiations. No negotiations have taken place of the character that I described on Monday by use of the chain of communication. That chain is a secret and valuable one.
The hon. Gentleman is right to point to the value of a secret means of communication with groups such as Sinn Fein. It should not be assumed that there is a direct analogy with the Israeli-Arafat process because no negotiations have been conducted by means of that chain.

Lady Olga Maitland: Will my right hon. and learned Friend join me in welcoming the remarks by the Archbishop of Armagh yesterday here at Westminster when he called on Sinn Fein and the IRA to cease violence and, more than that, called for them to accept unambiguously the democratic process?

Sir Patrick Mayhew: I have heard many tributes paid to the speech made by Cardinal Daly yesterday which, unfortunately, I was not able to hear. The Archbishop was a fine record of resistance to and denunciation of violence which is pursued for political purposes or for any other purpose. His speech will repay a careful examination.

Mr. McNamara: Does the Secretary of State acknowledge the value of the goal of a united Ireland?

Sir Patrick Mayhew: One needs to be careful when speaking in language that attributes value to a particular notion. The British Government cannot join the ranks of the persuaders. Here we differ from the Opposition who wish to persuade the people of Northern Ireland to leave the United Kingdom and join a united Ireland. We believe that it should be for the people of Northern Ireland to determine for themselves, without persuasion from us, whether they wish to remain in the United Kingdom. Therefore, the hon. Gentleman asks a rather naively loaded question when he asks whether we will sign up to the value of a united Ireland. What we sign up to is the value of maintaining a democracy and the rights of all democrats within the United Kingdom.

Mr. Butcher: I welcome the hint that my right hon. and learned Friend gave earlier that he may be considering restoring some of the functions of local government within the Province of Northern Ireland, but will he reassure me on whether a stage has been reached in which a foreign Government have a say in the internal constitutional affairs of the United Kingdom, or do the conversations that are going on with the Government of southern Ireland exclude that possibility?

Sir Patrick Mayhew: No, the Government stand by the agreement reached between all the four main constitutional parties and the Irish Government and ourselves back in 1991 that there should be discussions—political talks—with a view to achieving an overall settlement of all the political relationships within Northern Ireland, between north and south and between Dublin and London. The parties agreed that there should be a place in that process at a particular point for the Irish Government and that point was reached. When sufficient progress on strand 1 had been attained, the Irish Government came in. We hold to that agreement to which all the four main constitutional political parties adhered and we are not at the moment in the course of conducting any discussions that are incompatible with that agreement.

Mr. Hume: Following what the Secretary of State has just said, he will reaffirm that the talks process to which both Governments and all parties agreed involved facing up to all the relationships that go to the heart of the problem, and those relationships include relationships with this Parliament. Have the Government already agreed a relationship with any party in this Parliament behind the backs of other parties?

Sir Patrick Mayhew: The hon. Gentleman knows the answer very well. He had better come out openly and ask whether a deal has been done between the Government and the Ulster Unionist party. If he asks that—[Interruption.] I would rather the hon. Gentleman did not shout while I am trying to answer his question, because I assume, in his favour, that he is interested in an answer. If that is what the hon. Gentleman means, I have nothing to add to what my right hon. Friend the Prime Minister and the right hon. Member for Lagan Valley (Mr. Molyneaux) have said. If, on the other hand, the hon. Gentleman is referring to the report issued by the Procedure Committee last night, the Government have not reached a conclusion on that. The Government will study what has been said and will take account of the views of parties in the House in the ordinary way. Much has been said here about the need to reduce the democratic deficit in Northern Ireland and affecting


Northern Ireland, and it might be said that there is some value in having a Select Committee to look at the affairs of Northern Ireland rather than six separate Select Committees taking part of Northern Ireland's affairs into their ambits as they discuss the matters of individual Departments in Westminster. I simply offer that as an answer to the hon. Gentleman.

Police Authority

Mr. John D. Taylor: To ask the Secretary of State for Northern Ireland if he will make a statement on the Northern Ireland Police Authority.

Sir John Wheeler: The current membership of the Police Authority's term of office expries in June 1994 and the normal process for appointment of new members of the authority will commence shortly. I encourage all those approached for nominations to the authority to respond positively.

Mr. Taylor: It was the last Government at Stormont who brought into existence the Northern Ireland Police Authority so that there would be cross-community involvement in supervising the provision of an efficient police service in Northern Ireland and to distance the police from political and Government control. Can the Minister assure the House that there is no intention to return the RUC to political or governmental control next year?

Sir John Wheeler: I can certainly give the right hon. Gentleman that assurance. Consideration is being given to arrangements for policing structures in Northern Ireland, taking into account the White Paper and the Sheehy inquiry. Any changes would reflect the concerns of the people of Northern Ireland about policing, the need to hold the Chief Constable accountable to the community in Northern Ireland and the need to ensure the acceptability of the police to all sections of society in Northern Ireland.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Ieuan Wyn Jones: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister (Mr. John Major): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.

Mr. Jones: Is the right hon. Gentleman aware of the vital importance of the north Wales railway line to the economy of north-west Wales, an importance recognised by the European Community? Yesterday's announcement about improvements to the west coast main line omitted to include any reference to the section to Holyhead. The Chancellor in his Budget statement did not even mention north Wales.
May I impress on the Prime Minister the need to include the north Wales section in that programme, which should also include new rolling stock as well as track improvements?

The Prime Minister: I am afraid that I cannot give the hon. Gentleman any immediate commitment to that section of rail. Of course, in due course that will be a decision for Railtrack in conjunction with operators on the line. They will have to determine whether a commercial case exists for upgrading, electrifying or whatever appears to be appropriate for the north Wales line.
Our commitment to the west coast main line is now clearly stated. The introduction of private finance can play a very substantial part both in the improvement of the line and in the renewal of much of the infrastructure.

Mr. Ian Bruce: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Bruce: Will my right hon. Friend take this opportunity to condemn the merciless way in which Opposition spokesmen tried to frighten pensioners—

Madam Speaker: Order. The Prime Minister is riot responsible for Opposition policy or activities.

Mr. Bruce: Indeed, Madam Speaker.
Will my right hon. Friend confirm that the Government have fulfilled their commitments to pensioners? Will not the tough fiscal stance that we are continuing to take ensure that low interest rates and low inflation, which are the cornerstone of our recovery, continue to benefit both industry and the public?

The Prime Minister: I certainly condemn scares, from wherever they may come. The Budget is delivering our policies to pensioners. We are delivering low inflation to protect their savings, we have uprated the pension to meet the cost of VAT on fuel, and we have introduced an income bond to give them a guaranteed income month after month. At the same time, we have been able to give a boost to business and to deliver sound public finance. The Budget is well on track to deliver, in due course, rising prosperity to all our citizens. I am glad to note that the hon. Member for Glasgow, Garscadden (Mr. Dewar) agrees with the Government that the proposed assistance to pensioners for fuel bills is adequate.

Mr. John Smith: At a time of high unemployment, what is the moral justification for cutting entitlement to unemployment benefit from 12 to six months?

The Prime Minister: As the right hon. and learned Gentleman knows, we have made substantial contributions towards both training and getting the unemployed back to work, which is the priority. Through unemployment benefit and subsequently, where necessary, through income support, we are ensuring that there is assistance for those who remain unemployed.
Now, thankfully, we are seeing unemployment beginning to fall in every part of the country, and that is beginning to affect the long-term unemployed. The right hon. and learned Gentleman will know also that the majority of people who become unemployed are back in work within the six-month period for which they will still be entitled to unemployment benefit.

Mr. Smith: Does the Prime Minister not begin to understand that it is a fraud on the public to raise national insurance contributions by a full 1 per cent. at the same


time as cutting a benefit to which people have contributed all their working lives? Why do the Government not attack unemployment instead of attacking the unemployed?

The Prime Minister: The right hon. and learned Gentleman had his own, rather more dramatic, plans for increasing national insurance contributions. At the same time, he has his own plans for unemployment—plans which would put it up. A new training tax on employers would put it up. A minimum wage would put it up. Businesses with new taxes levelled up to the higher rates in other European countries would put it up. Forcing employers to introduce a 35-hour week would put it up. That is the right hon. and learned Gentleman's prescription for the economy. It would make more people unemployed, and for longer.

Mr. Smith: Does the Prime Minister not understand that in the real world in which, unfortunately, unemployed people have to live, if their partners work more than 24 hours per week they move from unemployment benefit to nothing—[Interruption.]—No, it is 24 hours per week. It was changed by the Government, as the Secretary of State for Employment should understand. Does the Prime Minister not understand that, however low the income that the working partner earns, the unemployed partner will receive no benefit? Is that not disgraceful in a country with so many unemployed?

The Prime Minister: The right hon. and learned Gentleman grows indignant in his usual fashion. Will he drop the policies that would make people unemployed, which he parades month after month? If not, what does he have to say to the hon. Member for Kingston upon Hull, East (Mr. Prescott), who said of a national minimum wage:
I knew the consequences were that there would be a shake-out in unemployment. Any silly fool knew that"?
Not quite any silly fool, it seems.

Sir Thomas Arnold: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Sir Thomas Arnold: Is my right hon. Friend aware of the widespread support for measures announced in the Budget to help small businesses? In particular, is he aware of the support for the announcement that the statutory audit for very small firms is to be abolished?

The Prime Minister: Yes, I am aware of the support from many small business men and every small business organisation for the measures in the Budget. They do in a substantial way take the burdens off small businesses, abolish the audit requirement, and make matters simpler for more than 500,000 companies in this country. We are also raising the value added tax threshold to take 75,000 traders out of VAT. Ours is the only party committed to taking such measures to help small businesses.

Mr. Ashdown: As the country waits to back the Prime Minister if he will take further risks for peace in Northern Ireland, will the right hon. Gentleman take this opportunity to reaffirm that he has no difficulty with the principle of separate and parallel self-determination for the people of the island of Ireland—north and south?

The Prime Minister: For us, there is one fundamental point. It is that Northern Ireland's status as part of the United Kingdom will not change without the freely expressed consent of the people of Northern Ireland.

Mrs. Gillan: Has my right hon. Friend had time to reflect today on the overwhelming vote of support that the other place gave the Government last night?—[Laughter.]

Madam Speaker: Order. This is a waste of time. [HoN. MEMBERS: "Yes."] Order. The House is using up precious time.

Mrs. Gillan: Is not that great success and the overwhelming support for the Budget on Tuesday further proof that the Labour party is totally out of touch with the British people, both in the other place and in this House?

The Prime Minister: I do not know that my hon. Friend's last comment about the Labour party being as out of touch in the other place as here can possibly be true. The reality is that it is rather odd to table a motion of no confidence in the Government in the other place the day after failing to vote against the Queen's Speech. I rather suspect that the outcome of the vote in the House of Lords, where fewer than 100 Labour Peers were prepared to support the Opposition, shows a great lack of confidence in the Labour party in this House and nationally as well as in the leadership in the House of Lords. That may be because it used to be a serious party, but it is no longer that because it has no policies.

Mr. Gordon Prentice: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Prentice: Will the Prime Minister admit to any embarrassment or even mild contrition at presiding over the biggest tax rises in British post-war history? Is it not a grotesque betrayal of the people who voted for his party 18 months ago that he should now be introducing these colossal tax rises?

The Prime Minister: I did not notice a great deal of complaint from the hon. Gentleman over the expenditure to protect people who were vulnerable during the recession. I did not hear a great deal from the hon. Gentleman about that. Broadly, had the Labour party won the election and were its members sitting on the Government Benches having implemented their programme, the increase to the average taxpayer now would have been about £24 a week.

Mr. Dykes: Does my right hon. Friend feel that on Northern Ireland we can do without the shifting and swinging influence and suggestions of the Liberal Democrats, in view of the utterances of that party's leader at the weekend? Does my right hon. Friend agree that the Government's policy is clear and well balanced and provides the only way forward to a lasting and durable solution? I wish my right hon. Friend well for the meeting with the Taoiseach tomorrow.

The Prime Minister: I am grateful to my hon. Friend and to other hon. Members who have indicated their support for the meeting tomorrow. I hope that we shall be able to make some further progress. There is an overwhelming feeling in Northern Ireland and elsewhere


that we should seek to produce peace in Northern Ireland if we can, but there are parameters to those discussions and that must be understood. The first parameter is that to which I referred in answer to the right hon. Member for Yeovil (Mr. Ashdown), the leader of the Liberal Democrats, a moment ago.

Mr. Milburn: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Milburn: Is the Prime Minister aware of my constituent, Michael Gibson, who died in August this year 16 months after being violently assaulted in Darlington town centre? Is he also aware that Michael's killer is now free to roam the streets again because the current law stipulates that a charge of murder can be brought only if a victim dies within 366 days of an offence taking place? Will the Prime Minister join me and the Gibson family in urging the Home Secretary to review a law which not only takes no account of advances in medical technology, but which simply fails to deliver justice?

The Prime Minister: I was not aware of the particularly tragic case to which the hon. Gentleman refers. I should like to send my sympathy to the family. I can assure the hon. Gentleman that my right hon. and learned Friend the Home Secretary is looking at precisely that matter now.

Mr. Nicholas Winterton: Is my right hon. Friend aware that all of us who entirely endorse his total and complete commitment to peace in Northern Ireland believe

that one way of solving that desperate problem is to integrate Northern Ireland completely and entirely in the United Kingdom? Will he give the matter some consideration because many Members on both sides believe that that could bring the problems of Northern Ireland to a speedy conclusion?

The Prime Minister: Among the principles agreed last year was an agreement, accepted across the House, that we were looking for an agreement that would stretch right across Northern Ireland and all the individuals who live in Northern Ireland. It is for that reason that we are pursuing, as we are at present, the objectives that I set out earlier.

Mr. Michael: To ask the Prime Minister if he will list his official engagements for Thursday 2 December.

The Prime Minister: I refer the hon. Gentleman to the answer I gave some moments ago.

Mr. Michael: Will the Prime Minister face up to the implications of his Government's Budget? Does he accept that not only the car worker, for whom he cried crocodile tears before the last election, but the average experienced police officer will pay well in excess of £500 extra in tax on their basic pay? Is the right hon. Gentleman proud of presiding over the biggest tax bill ever for the British public?

The Prime Minister: The hon. Gentleman might bear in mind that probably the car worker whom he is talking about is now exporting and making more cars than ever before and therefore has a more secure future, not least because of the policies that we have followed to get down inflation and interest rates.

Business of the House

Mrs. Margaret Beckett: Will the Leader of the House be good enough to give us the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): Yes, Madam. The business for next week will be as follows:
MONDAY 6 DECEMBER—Continuation of the Budget debate.
TUESDAY 7 DECEMBER—Conclusion of the debate on the Budget statement.
WEDNESDAY 8 DECEMBER— Consideration in Committee of the Sunday Trading Bill (first day).
Motion on the Broadcasting (Restrictions on the Holding of Licences) (Amendment) Order.
THURSDAY 9 DECEMBER—There will be a debate on the European Community white papers, European Community budget and subjects to be discussed at the forthcoming European Council, on a Government motion.
FRIDAY 10 DECEMBER—Private Members' motions.
MONDAY 13 DECEMBER—Proceedings on the Social Security (Contributions) Bill.
The House will also wish to know that European Standing Committee A will meet at 10.30 am on Wednesday 8 December to consider European Community document No. 8441/93 on the protection of animals during transport.

[Wednesday 8 December:

European Standing Committee A—Relevant European Community document: 8441/93, transport of animals; Relevant European Legislation Committee reports: HC 79-xxxviii (1992–93), HC 48-i (1992–93).]

Mrs. Beckett: I thank the Leader of the House for that statement. I remind him that Labour Members expressed great concern last year about the fact that many people were losing their right to vote because of the defective state of electoral registers, especially in the Tory-controlled London borough of Brent. As this year's initial figures show that the electoral register in Brent is down yet again by 13,000, and as the council is refusing at present to do anything about it, will he ask the Home Secretary to make a statement to the House about the activities that the Government are undertaking to ensure that people have the right to vote?
In particular, will the right hon. Gentleman ask the Home Secretary to take account of parliamentary answers given to my hon. Friend the Member for Paisley, South (Mr. McMaster) on 26 November, which show that, although in Scotland and Northern Ireland the relevant Secretaries of State intend to mount a publicity campaign to remind people who are disabled or sick or who have a right to proxy and postal votes of their entitlement to vote in the local and Euro-elections, no such campaign is planned in England and Wales? We should like the Home Secretary to address that issue.
Will the Leader of the House ask the Minister of Agriculture, Fisheries and Food to make a statement to the House, perhaps next week, on the defeat that the Government have suffered in the High Court at the hands of the fishing industry on the compulsory tie-up policy, which as yet has not been reported to the House?

We all very much hope that, once the process of debates on the Budget is complete, there will be early and full discussions on the way in which business is now being handled. It cannot be satisfactory to the House to have substantial statements at the outset of business on each day of the Budget debate, thus squeezing the start of the debate itself well into the early hours of the evening? Because the Budget is combined with public expenditure, we all understand the need somehow to handle those statements, but there could and should have been full discussions about how we should deal with this before the unified Budget process was introduced. Since that has not happened, will the Lord President assure us that it will happen before next year, and may we have an Opposition day soon?

Mr. Newton: That was a rather longer list of questions than the right hon. Lady usually has. I will do my best to deal with them all.
First, as to the electoral register, I think that the right course is for me to bring the right hon. Lady's observations to the attention of my right hon. and learned Friend the Home Secretary. I hope also that, in the light of what the right hon. Lady said, the people who are responsible for those matters in Brent might also give them some consideration. The right hon. Lady might care to transmit that message as well. [Interruption.]
As to the days-at-sea point, as the right hon. Lady said, the National Federation of Fishermen's Organisation's case against the Government has been referred to the European Court, which, I understand, is unlikely to rule on it in less than 18 months, so final judgment in the United Kingdom will be correspondingly delayed.
I assure the right hon. Lady that the Government are urgently studying the position and will make an announcement when they are in a position to do so. I am sure that my right hon. Friend the Minister of Agriculture, Fisheries and Food, who is on the Front Bench, will have noted the request as to the way in which that announcement should be made.
As to the Budget debate and the right hon. Lady's observations, I think that I made it clear several times, not least to my right hon. Friend the Chairman of the Procedure Committee, that we do think that it will be right to review any lessons that need to be drawn from the unified Budget procedure in the light of experience this year. Of course we would expect to have regard to representations that the right hon. Lady might make through the usual channels or in other ways.
I would, however, make the point that, until the date of the social security uprating statement, for example, was changed the Government—in the mid-1980s as I recall, probably when I was Minister of State—for many years it was the norm for the social security statement to follow in the immediate wake of the Budget, as it has done this year. If the right hon. Lady wishes to make representations to the effect that she would prefer those matters to be dealt with only after a long delay—which, as they are involved in the Budget, would seem a bit odd—or by written answer, rather than oral statement, I would happily consider those possibilities.
Lastly, on the subject of Supply days, I always seek to satisfy the right hon. lady's ambitions, but I cannot make any great promises for the period between now and Christmas at this stage.

Mr. Bob Dunn: Will the Leader of the House arrange for an early, urgent debate on the policies that are being followed by local education authorities controlled by Labour and Liberal Democrat coalitions, not least in the county of Kent, where up to £100,000 of council tax payers' money is being set aside to encourage schools vigorously not to embark upon a policy of securing grant-maintained status?

Hon. Members: Abuse.

Mr. Newton: This is, I think, the second Thursday running when significant questions relating to the way in which Kent is dealing with those matters have been asked in the House. I will ensure that the attention of my right hon. Friend the Secretary of State for Education is drawn to them.

Mr. Nigel Spearing: Will the Leader of the House confirm that next Thursday's business about EC documents and the motion that he intends to place before the House is not confined to the budget of the EC for the next year, but also relates to an adjustment of its own financial structure for the next few years? If that is the case, can the Leader of the House confirm that the forthcoming meeting of the European Council to which the motion will no doubt relate will take decisions on that matter, and that any Bill that may come before the House subsequently will be only to effect those decisions and not to give leave to anyone to agree to them?

Mr. Newton: The list of documents that are to he taken into account in the debate next Thursday is extensive, and it would not be sensible for me to attempt to run through them all at this stage. Nor, indeed, can I give undertakings —it is literally not within my power—as to precisely what will emerge from the meeting of the European Council. I note, however, the points that the hon. Gentleman makes.

Mr. Simon Coombs: Is my right hon Friend aware of the inquiry that is currently being undertaken by the Arts Council into the future funding of the four London orchestras? Can he arrange for a debate to be held before Christmas, because this is a matter of urgency, so as to ensure that the House has an opportunity to express its views about a process which could lead to the destruction of two of those four orchestras, with consequent effects on the artistic and cultural life of the capital city and elsewhere, and on Britain's balance of payments?

Mr. Newton: I believe that the Government's commitment to the arts has been clearly demonstrated over a long period. Indeed, despite the continuing need to keep strict control of public expenditure, we have managed even now to find more money than was planned for the arts. I put that fact on the table before my hon. Friend, but I cannot promise what I would call a dedicated debate. However, he may find that there will be opportunities for him to raise the matter, if he wishes, before the House rises for the recess.

Mr. Alfred Morris: The Leader of the House comes to these occasions well briefed, but is he aware of my representations to Ministers earlier today about the 3,000-plus Ferranti workers now heading for the back of the longest queue in Britain—the dole queue? Will the right hon. Gentleman ask every Minister who can help to do so urgently, and may we have an oral statement next week on the Government's response to this tragedy?

Mr. Newton: I will draw the latter request to the attention of my right hon. Friend the President of the Board of Trade, but I can readily assure the right hon. Member that of course Ministers in the Department of Trade and Industry, the Department of Employment and any other relevant Department will wish to do everything they can to assist with problems that will follow what has occurred at Ferranti.

Mr. Harry Greenway: May we have a debate or statement before Christmas on safety standards and maintenance on London Underground, including investment in that organisation, so that my constituents, many of whom have to commute into London, can be reassured that they will not again have to face the awful ordeal that they suffered a few days ago, which caused many of them considerable difficulty?

Mr. Newton: My hon. Friend will be aware that the investment programme in London Transport continues at a high level—significantly higher than in the days of the old Greater London council, for example. But I shall draw my hon. Friend's remarks to the attention of my right hon. Friend the Secretary of State for Transport.

Mr. Simon Hughes: Now that we have reached the time of year when we celebrate both the Hindu festival of light and Advent, which is a preparation for our celebration at Christmas, may we have some enlightenment and some news worthy of celebration from the Leader of the House? May we hear details, set out in a logical way, of when the Government expect to introduce the legislation mentioned in the Queen's Speech, for which they obtained the assent of the House, so that we have some idea of the timetable for the year, especially in relation to the Sunday trading option votes—[HON. MEMBERS: "It is on Wednesday."] No, that is only the first day. May we also have some news about ordering the sittings of the House sensibly—news often promised but never yet delivered?

Mr. Newton: In my concluding speech in the debate on the Loyal Address, I made some comments on the continuing efforts to achieve progress in securing the necessary agreement on that matter, and I cannot now add to what I said then.
On the first part of the hon. Gentleman's question, I presume that he had noticed that I announced the debate on the Sunday trading options, which we hope will be dealt with next Wednesday. Thereafter, I expect the Bill to go to Standing Committee and at some later stage, perhaps while the Bill is still in Committee, we shall have on the Floor of the House the day that has been committed for the employment protection provisions.
Beyond that, I cannot yet give the hon. Gentleman a detailed catalogue of the dates on which Government Bills will appear. Some have already appeared; some will have their Second Readings in the House of Lords in the next week or two; others I hope to bring forward shortly after Christmas.

Mr. Simon Burns: As there is no time in next week's business schedule for a debate, will my right hon. Friend draw to the attention of the President of the Board of Trade the appreciation of my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) and myself of this morning's announcement by the Department of Trade and Industry that Chelmsford


in Essex has received the full bid for KONVER funding to help defence-related industries that have suffered so many redundancies, and to provide a future, so that we can rebuild part of the manufacturing base in our constituencies?

Mr. Newton: As my hon. Friend knows, I shall have the greatest possible pleasure in communicating his mèssage to the President of the Board of Trade, because it would be easy for me to couple my name with that of my hon. Friends and to express my congratulations to the people from Essex county council and elsewhere who have put so much work into developing the project, not least because it is probable that as many of my constituents as my hon. Friends' will be helped.

Mr. Greville Janner: May I draw the attention of the Leader of the House to early-day motion 155?
[That this House condemns the Portuguese Government and authorities for its failure to investigate the tragic death of Paul Kenney, whilst on holiday in Portugal in July; is outraged that the Portuguese authorities failed to take any steps to trace Paul's family, who were in Portugal at the time and were only informed of his death after his parents traced him to a local hospital, where the body had lain for four weeks after being found on a beach in Portimao, although on several visits to the hospital his parents were told that no person of his description had been admitted; expresses its dismay that even though Paul had telephone numbers on his person that would have helped identify him, neither the police nor the hospital made any effort to trace his next of kin; condemns the extraordinary discourtesy of the Portuguese Ambassador and his staff towards the honourable Member for Leicester, West, when he sought to progress this matter on behalf of his constituents, the Kenney family; and demands that the Portuguese Government now take immediate action to investigate Paul Kenney's death, to inform the bereaved family of its causes and circumstances, and to apologise to the family for the disgraceful way in which it has treated them and their awful tragedy.]
It concerns the awful tragedy of the death of a young constituent of mine, Paul Kenney, while on holiday in Portugal and the outrageous behaviour of the Portuguese authorities. Could the Foreign Secretary make an early statement on why that British citizen's family were not informed about the death for four weeks, why they found out only by chance and why, even now, the Portuguese authorities have refused or failed to provide any information on how the death occurred, despite my efforts to find out through the Portuguese embassy—efforts that were most discourteously treated?

Madam Speaker: Order. The hon. and learned Gentleman will know that that subject has been selected for an Adjournment debate.

Mr. Newton: Thank you, Madam Speaker. I was going to tell the hon. and learned Gentleman that. The Government share the concern shown in the motion about the circumstances of Mr. Kenney's death and the lack of notification to his family. We hope that the Portuguese

authorities will respond positively to our consul's formal and informal requests for an explanation, and we shall continue to press for that.
As you, Madam Speaker, helpfully and informally reminded me, and as I was about to remind the hon. and learned Gentleman, if he did not already know, he has the Adjournment debate on that matter on Friday 10 December, when he will have a greater opportunity to ventilate his concerns.

Mr. John Greenway: Will my right hon. Friend tell the House when he expects that we will be able to have a full day's debate on agriculture? I understand that it was initially intended to have a day before Christmas. He will know from the statement of my right hon. and learned Friend the Chancellor that there is to be a further reduction in the support given to hill farmers. It is likely that the first chance that the House will have to debate agriculture is when some specific, related motion comes before the House late at night. Would it not be much better to take a thorough, on-going look at agriculture to see how hill farmers are bearing up in the general context of farming?

Mr. Newton: There are three observations to be made on that issue. First, the Minister of Agriculture, Fisheries and Food will be here on Thursday to answer questions. Secondly, on the same day, there will be extensive debating of European matters, into which he may probably squeeze a reference. Thirdly, I hope that he will acknowledge that, despite the reductions to the allowances to which he referred in 1993, the net farm income of the relevant farms rose by 33 per cent. in real terms between 1991–92 and 1992–93, and is set to rise by a further 28 per cent. this year.

Mr. Bob Cryer: May we have a debate next week on early-day motion 157?
[That this House welcomes the information provided by the Channel 4 programme Dispatches, broadcast on 1st December, which demonstrated conclusively that Aims of Industry is a front for the Conservative Party; notes with surprise that a number of companies who made donations to Aims of Industry have not included these in their annual report in breach of the Companies Act 1985; notes with concern the suggestion that before the 1992 general election Aims of Industry funded a campaign on behalf of the Conservative Party in Wallasey, apparently in breach of the Representation of the People Act 1983; and calls on the Prime Minister to instruct the President of the Board of Trade and the Home Secretary to authorise immediate investigations with a view to prosecuting those responsible.]
It concerns Aims of Industry and the Conservative party. In addition to a discussion about how Aims of Industry has illegally raised funds on behalf of and with the knowledge of the Conservative party—generally and in the constituency of Wallasey—we can discuss the dinners that the Prime Minister is again beginning to promote, with a tax-free subsidy that helps those dinners, and discuss the relationship between those who attend and donations from the tobacco companies, for example, to the Conservative election campaign in 1992 and the consequent refusal of the Government to introduce a ban on tobacco advertising.

Mr. Newton: I find the extent to which the hon. Gentleman appears to claim that the entire world rests on a permanent, running conspiracy of some kind quite


extraordinary, and sometimes almost laughable. The Government's view is absolutely clear: that all companies should comply with the requirements of the Companies Act 1985, which was introduced by the Government. I hope that, in the light of what the hon. Gentleman has said, he will find it possible also to condemn the millions of pounds spent on what was, in effect, political advertising by the National and Local Government Officers Association during the general election.

Mr. Anthony Steen: Will my right hon. Friend find a way to promote the superintendent of police in the Commons for his exemplary work in creating the maximum number of obstructions which prevent hon. Members from getting to the Commons and to the Chamber? Outside St. Stephen's entrance in particular there are more and more barriers which now resemble something out of Hampton Court maze.
During Divisions, we cannot get round Parliament square by car or by taxi because there is no police cover at the traffic lights to enable us to get through. When one finally arrives in New Palace yard, one finds that only officials and not Members of Parliament can park there. We have to park five or six floors down in the underground car park. Is it not time that we ensured that the House of Commons is run by and for Members of Parliament and not by officials for officials?

Mr. Newton: I shall convey my hon. Friend's initial recommendation to those responsible for these matters, although they may find that the gloss that he subsequently put on it conveys a rather different flavour. I say straightforwardly, not least because of your involvement in and knowledge of these matters, Madam Speaker, that there are present in the Chamber significant numbers of people concerned with security arrangments in and around the House who, I am sure, have noted what my hon. Friend has said and what has been said by a number of hon. Members earlier this Session.

Mr. David Winnick: As the Minister responsible for such matters, will the Leader of the House give us an assurance that no motion will be put on the Order Paper for the establishment of a Select Committee on Northern Ireland? Would it not be wrong, at this time of all times, to do anything that would further divide the constitutional parties in Northern Ireland? There was no direct recommendation from the Select Committee on Procedure. The Committee was split, with Labour Members making it clear that we were opposed to such a Committee. I hope that the right hon. Gentleman bears in mind the sensitive position over Northern Ireland at present.

Mr. Newton: I have, of course, looked at the report that the Procedure Committee agreed last night, and I have noted the voting pattern to which the hon. Gentleman accurately refers. He well knows that the Government have consistently acknowledged that, although such a Select Committee may, in principle, be desirable, a number of issues need to be considered before coming to a decision, let alone before putting proposals to the House. Obviously, any such proposals need to be the subject of discussion.

Mr. Ian Duncan Smith: Will my right hon. Friend give his attention to the announcement of a debate next Thursday on the European Community White Paper and budget? We find that all the relevant papers are

not available at this stage. I have in my hand what is a available so far. Do we have enough time to review the documents, given the short notice?

Mr. Newton: I shall take first the main thrust of my hon. Friend's question. He is right to think that the documents that will be referred to in the motion are already in the Vote Office, as he has physically demonstrated, or will be there as soon as possible. Some of my documents are being prepared for the European Council, and final versions may not be available until early next week. It is obviously right that debate should take place before the European Council. The House would expect that to happen and would complain if it did not; that inevitably involves some late documentation, I am afraid.

Mr. Dennis Skinner: When shall we have a Government statement about the role of the judges in meting out so-called "justice" in the courts? Does it not stink in the nostrils that Roger Levitt, who was involved in a £34 million swindle, was recently allowed to escape on the most important charges by the Government's Crown Prosecution Service, and that he finished up with 180 hours community service? He has friends in the Tory party, including Tory Members.
Terry Ramsden, a member of the race horse fraternity who was involved in a swindle of more than £50 million, got only an 18-month suspended sentence. Yet a Labour councillor in Derbyshire, in a case involving £13,000, was sent down the line for 18 months. Poll tax payers who refuse to pay the poll tax on principle are sent to gaol for as long as six months. There are double standards operating in British law, which is what one would expect from this tin-pot Government.

Mr. Newton: That is another question of what might now be regarded as a traditional variety from hon. Members who sit just below the Gangway. I simply observe, as calmly as I can, that I shall draw the hon. Gentleman's remarks about judges to the attention to my right hon. and learned Friend the Lord Chancellor and his observations about the Crown Prosecution Service to the attention of my right hon. and learned Friend the Attorney-General.

Mrs. Cheryl Gillan: Will my right hon. Friend look carefully at his timetabling, and give time to a matter that is of great importance to all the parents in my constituency and to every parent in the United Kingdom: the fitting of seat belts in coaches? There have recently been two tragic crashes. One of them was on the M40, near my constituency, when many young lives were lost. Sadly, last week there was another crash, on the A3. Although the children who were wearing seat belts were hurt, they were not killed.
I should be grateful if time could be put aside to debate the matter, as it is of great concern to all parents throughout the United Kingdom whose children travel every day on coaches and minibuses.

Mr. Newton: I well understand why my hon. Friend raised that question. Although I cannot promise time for a dedicated debate—as I called it earlier—she may find opportunities to raise that matter if she wishes between now and the recess. I will draw her remarks to the attention of my right hon. Friend the Secretary of State for Transport.


The Government are currently reviewing the technical and cost implications of her proposal, but feel that it would be unwise to rush into new legislation until the full reports of those accidents have been thoroughly considered.

Mr. Alex Salmond: Can we have a statement on the future of the days-at-sea legislation before the European debate next Thursday? Would it not be foolhardy to proceed with such controversial legislation while the matter lies before the European Court?
On the same time scale, can we have a statement on the crisis in the Scottish salmon industry, which impacts on thousands of jobs across rural Scotland? Why are the Irish Government defending the interests of their producers in Europe more vigorously than the British Government are defending our producers? Those of us who hope to see better Irish-British co-operation on a number of important issues would like to see some practical co-operation to protect the interests of that vital industry.

Mr. Newton: On the latter point, I am sure that the hon. Gentleman will know of the active interest that my right hon. Friend the Secretary of State for Scotland has been taking in those problems. He will know also that the Commission introduced emergency safeguard measures in the form of minimum import prices to provide a temporary floor in the market while the longer-term problems that face the industry are addressed.
As to the first part of the hon. Gentleman's question, I cannot give a date for any announcement by the Ministry of Agriculture, Fisheries and Food about the matter that I touched on earlier, but I take note of his request about the timing.

Mr. Jon Owen Jones: Can the Leader of the House give an assurance that, in Wednesday's debate on Sunday trading, there will be a completely free vote in the House of Commons and that there will be no so-called payroll votes on that issue?

Mr. Newton: I am reminded by my hon. Friend the Member for Derby, North (Mr. Knight), who is a member of the Whips Office, that that is not a matter for the Leader of the House. I presume that he is protecting some other empire. I do not speak for the Opposition Whips and therefore cannot say what they will do. Nobody has told me what to do.

Mr. David Shaw: Might it not be necessary to extend the debate on the Budget beyond Tuesday, given that so far we have had so few policies from the Opposition and that there is not much prospect in the next few days that we shall hear any more policy objectives from them?

Mr. Newton: That is a good question. Although I am much tempted, even if I were to extend the debate for a further year, the Opposition would still not have a policy.

Local Government Finance

Mr. David Clelland: On a point of order, Madam Speaker.

Madam Speaker: No. I take points of order at the end of statements.

Mr. Clelland: But this point of order is about the statement to be made by the Secretary of State for the Environment.

Madam Speaker: I am sorry; I can take points of order only—

Mr. Clelland: My point of order relates to what the Secretary of State is about to say. Hon. Members do not have the statement. I understand from the Vote Office that the Secretary of State has decided that hon. Members will not be entitled to see the statement until after he has sat down.

Madam Speaker: As I have explained on numerous occasions, it is at the discretion of the Minister whether to issue a copy of the statement before he makes it, when he rises or after he has finished. It is entirely a matter for him.

Mr. Jack Straw: Further to that point of order, Madam Speaker. It is normal for the documents relating to a statement to be made available by the Minister at the beginning of his statement, not at the end. Will the Secretary of State or the Leader of the House authorise the Vote Office to issue the documents? There is no question about it—they should be made available.

The Secretary of State for the Environment (Mr. John Selwyn Gummer): Further to that point of order, Madam Speaker. I would not want to be curmudgeonly. I merely did what I understood had been done before, and if the House would like the statement now, I am happy for that to happen.

Madam Speaker: Do I understand that the Secretary of State is releasing the documents in the Vote Office?

Mr. Gummer: I am.

Madam Speaker: Thank you very much.

4 pm

Mr. Gummer: With permission, Madam Speaker, I should like to make a statement about the local authority finance settlement for England for 1994-95—the document that is now in the Vote Office.
In forming my proposals, I have listened carefully to what local authorities and their associations have said to me, and I have considered fully the demands that will be placed on local authorities in the coming year. I have also weighed very carefully the interests of the economy as a whole. We must reduce the public sector deficit. Local government accounts for around a quarter of general Government expenditure and cannot be immune from our rigorous examination of all spending programmes.
I have had regard to levels of price inflation, with the RPI increase to October at 1·4 per cent. and the underlying rate currently the lowest for decades. I have also had in mind the statement of my right hon. and learned Friend the Chancellor of the Exchequer that any increase in public


sector pay in 1994–95 must be paid for by greater efficiency and economy. I have considered the scope that many authorities still have to increase their efficiency.
Those are the considerations underpinning the aggregate figures I published on 30 November. The Government's view is that the appropriate level of revenue spending for local authorities in England in 1994–95 will be £42·664 billion. Central Government funding in support of that expenditure will be £34·3129 billion.
Those figures reflect a number of specific changes in local authorities' functions next year. The most significant is the further increase in community care clients needing assessment and support. As my right hon. Friend the Secretary of State for Health announced on 29 October, the Government propose to make available in 1994–95 a special grant of £736 million for that purpose. That amount is included in the figures I have just quoted.
I remind the House that that comparison must be like with like. Therefore, excluding such function changes, my proposal provides for a 2·3 per cent. increase in local authority spending year on year. That reflects our responsible approach, and I believe is a fair outcome in the current circumstances. Provided that local authorities themselves take the same responsible approach to pay and efficiency, and in assessing their spending priorities, front-line local services can be maintained.
I announced on 30 November that the distributable amount of non-domestic rates in 1994–95 should be £10·685 billion, and I am today publishing details of the full calculation. I proposed that the main revenue support grant in 1994–95 should be almost £18·5 billion. In addition, some £5·1 billion of specific and special grants would be available.
That is the total, and we must now see how it is to be divided up. The means of distributing the revenue support grant has at its heart the standard spending assessment for each authority. This year, because of the many cross-party requests, we have undertaken a thorough review of how SSAs are calculated, in consultation with the local authority associations.
The review had two essential purposes: first, to bring the system up to date by incorporating detailed information on social characteristics now available from the 1991 census; and, secondly, to review the elements that make up the SSA calculation by reappraising the factors that determine necessary local authority expenditure.
There is not an hon. Member who will not have heard from his local authority that this or that factor might be done in a different way. We have sought to listen to those requests very carefully, in association with the local authority organisations. We are very grateful for the co-operation and participation of the local authority associations in the process of the review. In addition, 200 individual local authorities made detailed representations. All these points were carefully considered before I formulated my proposals.
The package of proposals is detailed, but I will describe briefly some of the main points as they are of the utmost importance to many hon. Members. Having considered the evidence, I propose to reduce the present weight assigned to the allowance for additional needs within the education element. This is in the light of an updated statistical analysis of the proportion of local education authority spending that is attributable to additional needs. Even after

the reduction, the additional needs allowance will still represent more than 20 per cent. of the education component of the SSA.
In the personal social services element, I propose a number of changes to the underlying indicators. In particular, for the assessments associated with elderly persons in need of domiciliary and residential care, I propose to introduce an indicator of long-term illness. That has been pressed upon me widely. For residential care, I also propose to adjust the calculation to reflect authorities' responsibilities under the community care arrangements.
One of the most controversial features of the method of calculating SSAs since they were introduced in 1990–91 has been the measurement of social conditions by means of the all-ages social index. That index aims to provide a broad measure of social conditions that are likely to affect the cost to local authorities of providing services. A large number of authorities have suggested that a wider range of social and economic indicators should be incorporated in SSAs. I have looked carefully at the evidence and I propose to introduce a revised social index and an economic index, which will include indicators of unemployment, ill health and homeless.
I also propose to make allowance for the numbers of day visitors within the assessment of services for districts. Previously, we did not have reliable data on a consistent basis for all authorities, but as a result of research commissioned for the purpose we now have the necessary estimates of numbers of day visitors by authority.
I have thought most carefully about the issue of the adjustment to take account of additional employment costs in London and the south-east. That is an issue on which opinions are sharply divided, and those divisions are almost entirely geographical. Those who fall within the area covered tend to be very enthusiastic about it; those who fall outside the area naturally find reasons why it is not correct. My predecessor acknowledged in the debate on the 1993–94 settlement in February that we would need to consider carefully the evidence for the present cost adjustment, and that is what we have done. I have concluded that there is firm evidence to support the present level of allowance for employment costs, and that there is justification for a further small addition for the costs of business rates. That is what I propose.
My proposals for 1994–95 are firmly based on the available statistical evidence, and I am confident that they will stand up to scrutiny. The system is fair, rational, up to date and comprehensive. Each of the proposed changes has been subject to the most rigorous analysis and has been incorporated only if it was resilient to that analysis.
At individual authority level, the effect of my proposals will vary. Changing a means of distribution to make it fairer produces losers as well as gainers. I recognise that authorities facing a reduction in SSA will need time to adjust their spending. I therefore propose to set aside some £280 million for a special grant to authorities whose SSAs are reduced by more than 2 per cent. as a result of the incorporation of the more detailed information from the 1991 census and of the review. The grant will be paid in support of expenditure by those authorities, cushioning the impact on council tax payers. I will review the situation next year before deciding whether to extend that transitional measure.
Last year my predecessor, my right hon. and learned Friend the Home Secretary, looked ahead to the first year of the council tax. He predicted that the tax would place


local government finance on a sure footing and would find general support. I am pleased to report that my right hon. and learned Friend's optimism was well placed, and that the council tax has been successfully established as the means whereby local residents contribute to the cost of local services. In doing so, I gladly echo my right hon. and learned Friend's commendation of the constructive role of local authorities and their associations in preparing for its introduction.
Council taxes can vary widely, depending on the spending decisions of each local authority and its performance in collecting the tax, on the circumstances of each household and on individual entitlement to exemptions or benefits. There is therefore practically no meaning in talking about average taxes. For the sake of grant distribution, however, we have to identify notional taxes for each valuation band, for a standard level of spending—the so-called council tax for standard spending or CTSS. My proposals incorporate a CTSS for band C of £468. I emphasise again, however, that that is merely an element in the grant formula. It is neither a prediction of individual council tax bills nor a national average, and those who have sought to use it as such in the past have found how very far out their calculations are.
One reason why the bills of individual households will vary is the effect of council tax transitional relief, which has reduced the bills of those who faced the largest increases from the move from one taxation system to another. Some 3·7 million households are benefiting from transitional relief this year. In line with our commitment to continue transitional relief for two years at least, I propose to make available, in addition to the central support that I have already announced, some £130 million to provide continued relief in 1994–95. In general, taxpayers will receive last year's relief less an amount ranging from £67 a year for band A to £137 a year for band H.
In the current economic circumstances, we are as determined as ever that local authorities should play their full part in making reasonable spending plans that their local taxpayers and the country can afford. I am today announcing my provisional capping criteria for 1994–95. I am also issuing proposals for the calculation of notional amounts for certain authorities whose boundaries will change from 1 April 1994. They are the base from which I will measure increases in budgets in determining whether those increases are excessive. In addition, my provisional capping criteria themselves make allowance for the expenditure on care in the community that is being met this year by the special transitional grant. That allows a fair year-on-year comparison.
As in previous years, my provisional capping criteria allow larger increases for authorities with budgets close to their SSAs than for those whose budgets are relatively higher. Where budgets are very substantially above SSA, I intend again to seek budget reductions. The effect of my intended criteria is that: any increase of more than 1·75 per cent. over 1993–94 will be considered an excessive increase if it gives rise to a budget requirement above the authority's SSA; any increase of more than 1·25 per cent. over 1993–94 will be considered an excessive increase if it gives rise to a budget requirement over 5 per cent. above the authority's SSA; and any increase of more than 0·75 per cent. over 1993–94 will be considered an excessive

increase if it gives rise to a budget requirement over 10 per cent. above the authority's SSA. In addition, I intend that any budget requirement more than 12·5 per cent. above SSA will be considered excessive—save that an authority will not be designated if it fulfils certain conditions equivalent to those that have applied in previous years. Those criteria are necessarily provisional. I cannot make any decisions on capping until authorities have set their budgets for 1994–95. When I come to take those decisions, I shall of course take into account all appropriate considerations.
One issue affecting a small number of authorities in 1994–95 is the start-up cost of local government reorganisation. Our intention is that, in 1994–95, authorities should be able to borrow for any such costs, and I am today issuing a consultation paper on the detailed arrangements.
In conclusion, my Department today is writing to every local authority in England with details of the system. The package includes a consultation paper which sets out how we propose to distribute central Government support between authorities, including my proposals for SSAs and for damping SSA losses.
The package gives details of the proposed council tax transitional relief schemes, sets out provisional capping criteria and includes proposals of notional amounts. It also includes a consultation paper on how costs arising from local government restructuring should be met. Copies of the package have been placed in the Vote Office and in the Library.
The proposals which I have outlined today represent a balanced and reasonable response to the conflict between the pressure to provide ever more resources for local government and the need to reduce the public spending gap. They provide for a 2·3 per cent. increase in local authority spending. They incorporate major improvements in the way in which the available resources are allocated, while protecting people in those authorities which stand to lose most from the results of the incorporation of the 1991 census data and the SSA review. They would allow council taxes next year to be set at reasonable levels, maintaining a substantial measure of transitional relief, and offering protection from excessive bills. They represent a package which the country can afford.

Mr. Jack Straw: On Tuesday we had the bizarre spectacle of the Chancellor of the Exchequer boasting of cuts in the House while the Secretary of State for Environment boasted of rises in spending outside the House. Since they cannot both be right, has not the Secretary of State surrendered to the Chancellor? Will the Secretary of State explain to the House how he came to issue a press release on Tuesday with the unqualified headline
Local Government Spending to Rise by 2·3 per cent"?
Did the Secretary of State know that was plain wrong or did he just not bother to check?
Has the Secretary of State studied the small print of the Red Book? Table 5.4 shows that, during the next two years, the cut which he has accepted and to which he has surrendered is £860 million next year and £1·5 billion the year after that. Is not that cut three times greater than has been conceded by any other Minister? Does the right hon. Gentleman understand that that is the worst record of any service-providing Minister?


Is the right hon. Gentleman proud or ashamed of his surrender, and of the damage which will flow from his failure—larger classes, higher home help charges, less help for vulnerable children, fewer day nursery places and lower spending on crime prevention and on youth work?
The Secretary of State claimed in the press notice, and repeated it today, that a 2·3 per cent. increase represented an increase in total spending. How does that fit with the letter which his predecessor, the present Home Secretary, wrote to the Chief Secretary in May saying that an increase of 5·2 per cent. was needed in total standard spending
to protect local authority services."?
If the then Secretary of State was right to claim that 5·2 per cent. was needed, how can the present Secretary of State be right today? Will the Secretary of State confirm that compared with what authorities are spending this year by lawful budgets, each of which was approved by his predecessor, the settlement will mean a 1·2 per cent. cash cut?
On top of those cuts, all councils will have cuts in their capital programmes, including a £500 million cut from the Housing budget and the re-freezing of capital receipts. Is not it crazy that local authorities should have over £5,000 million of capital receipts in the bank at a time of desperate housing, social and economic needs? They could and should use those capital receipts for the benefit of their residents for housing and for other much-needed capital projects, but instead they have to be locked up by order of the Chancellor.
Is the Secretary of State aware that, last December, the then Secretary of State told me
there is no need, as you suggest, for authorities to cut their staff as a result of my proposals for the 1993–94 settlement"?
Will the present Secretary of State repeat such a brazenly incorrect statement today? Does he realise that, contrary to that statement, during the past year thousands of local authority jobs have been lost as a direct result of that settlement? How many more jobs does the right hon. Gentleman estimate will be lost next year as a result of this settlement?
Standard spending assessments have a profound impact on spending and council tax levels, but the Minister will accept that the information which he has presented to the House, and which hon. Members have had just 15 minutes to digest while listening to his captivating statement, include complicated algebraic formulae and factors which run to 16 decimal points, and that in those circumstances councils will need time to comprehend the full impact of what he has announced today?
However, is it not clear, from the information that is already available to hon. Members, that once again the Secretary of State has sought to distort the system so as to stuff grant the way of a few favoured Tory councils? Can it be an accident? Annex A of an unnumbered special grant report shows that, of the 88 councils that are to receive the so-called standard spending assessment reduction grant, it is, surprise, surprise, Conservative-controlled Wandsworth which gets the largest amount—£26·5 million, nearly one tenth of the national total and £3 million more than Birmingham which has more than five times Wandsworth's population. What a surprise from a Government who claim to be fair. That is on top of the £30 million of so-called transitional relief, again one tenth of the total for the country, which his predecessor stuffed to Wandsworth this year.
If, as the Secretary of State claimed in his statement, his decisions today are "fair and rational" and will stand up to "scrutiny", why does he not do what the Audit Commission and the Opposition have proposed and submit his plans to the scrutiny of an independent local government grants commission to make recommendations to Ministers and to the House about the distribution of grant?
Is not it time for hon. Members and Ministers to recognise the futility of all this financial gerrymandering? Last May, despite extra grant to the then Conservative shires, the Tory party suffered its worst ever losses in those shires. On top of those losses, reducing Tory shires to one, in the last six months the Conservative party has lost control to Labour of Hillingdon borough council in outer London, of Gravesham council in Kent and, last Thursday, following an astonishing Labour victory in a safe Conservative ward, of Dover council. Local elections have repeatedly shown that the voters have overwhelming confidence in Labour councils, which provide far better services and have average council tax payments £14 per resident less than in Tory areas.
Despite the Secretary of State's weasel words, will he say by what percentage on this settlement he expects councl tax bills to rise on average? Will he confirm that the obscure figure of £468 for council tax total spending levels at band C means a band D tax, which is the central tax, of £526, and that, on the information that the Secretary of State has given to the House, that involves a 6·8 per cent. increase in council tax—four times the level of inflation?
As for capping, when will the Secretary of State recognise that he now presides over the most centralised system of council control in the western world, which denies local choice and which system was specifically disowned by the Prime Minister when he was Chief Secretary in a 1988 White Paper in which he said that councils spending from their own local revenue should form no part of the Government's control total?
Is not it astonishing that, of all Secretaries of State, the right hon. Gentleman, who is so ready sanctimoniously to lecture others about morality, should in today's statement be so alarmingly lacking in those key moral values of courage and candour? He lacks the courage to admit that he failed in the public spending round, and he lacks the candour to admit that his failure will lead to serious reductions in the services that councils provide and in the number of staff they employ.

Mr. Gummer: In a general statement on ministerial answers, Madam Speaker, you asked for answers to be kept short. However, I must tell the hon. Member for Black burn (Mr. Straw) that he does his cause no good by trying to produce false comparisons in the figures and seeking to avoid—[Interruption.] I am telling the absolute truth. I compare like with like, not like with totally unlike.
As an example, I shall take the hon. Gentleman's comment about the average council tax. If a council has a large number of low-banded houses, overall it will have a lower council tax than a council with a large number of high-banded houses. If there is to be a proper comparison, the hon. Gentleman must not twist the figures or misunderstand them—he must compare band with band. The truth is that, when comparing band with band, Tory authorities have lower taxes than Labour authorities. Of course, we would not expect otherwise because Tory authorities believe in low tax while Labour authorities


believe in high tax. The hon. Gentleman knows that and he uses his figures with a lack of candour and a great deal of cowardice. He is not prepared to use the proper figures.
I shall move on to other matters. To compare the Red Book figures with total standard spending is to compare like with unlike. The Red Book figures show an increase in spending for local authorities, as is perfectly proper. The TSS, compared with last year's TSS, has increased by 2.3 per cent. The current Red Book figures, compared with previous figures, suggest a smaller rise. That is not surprising because there is a much lower rate of inflation, many local authorities have learned to make their money go further by taking a more sensible view on contracting out and so on, and interest rates have decreased considerably.
This is the first time that I have heard a rise called a cut, except in the mathematics of the hon. Member for Blackburn. Indeed, his mathematics were pathetic. He referred to job losses, as he did on the previous statement. Indeed, he used the same figure last time as he used this time. He did not use it today in the House, but I heard him use it on the radio. I know the figure that he is using. Last time he said that Birmingham would suffer job losses. We all remember him saying that Birmingham would get rid of almost all its staff, there would not be any jobs and everything would be terrible. In fact, there was a 2.3 per cent. increase in the number of jobs in that council. That does not square with all the doom and gloom that we heard from the hon. Gentleman.
Of course, the hon. Gentleman was right to say that there would be some public sector job losses, because that is the consequence of going out to private tender. When a private firm wins a contract there is an increase in the number of private jobs and a decrease in the number of public jobs. The hon. Gentleman grabs the decrease and fails to mention the increase. He does not want more jobs, only more council jobs. That is what the issue is all about, even though he knows that an increase in private jobs and a decrease in council jobs lowers the cost of services, results in the provision of better services and gives the council more money to spend on other council services, which is what we want.
The hon. Gentleman says, "Do not let the Secretary of State for the Environment do that, or any of the people who used to do it before"—including in a Labour Government —"but let some private quango do it." The scourge of the quango wants a new quango. I think that is a very good idea. It would mean that I could come to the House and say, "I am awfully sorry that your SSA in Blackburn has fallen, or has not increased as much as you would like. But that is nothing to do with me—the independent quango told me what to do."
Happily, I am an elected Member of Parliament. I am responsible to the House for the figures. They are my figures, by which I stand. What is more, they are correct—unlike the false figures of the hon. Member for Blackburn.

Sir Anthony Grant: Will my right hon. Friend totally disregard the party political tomfoolery we have heard from the Opposition? If I understood the arcane figures correctly, Cambridgeshire county council will receive an SSA more than twice the

rate of inflation. Therefore, there is no excuse for inefficiency by the already incompetent Lib-Lab coalition in command there.
My right hon. Friend is to be commended for tackling the vexed question of the area cost adjustment. Is it not possible to correct the absurdities that result in Cambridgeshire receiving nothing and Oxfordshire and Bedfordshire receiving benefit by moving away from the crude and arbitrary regional area system and returning to a county system in interpreting area cost adjustment?

Mr. Gummer: It is perfectly true that my hon. Friend's authority is subject to an increased SSA, in common with a number of other authorities. I happen to have a list of them. Wigan, Barnsley, Doncaster, Rotherham, Sheffield and Newcastle all do extremely well—although the hon. Member for Blackburn might have thought that they would not—because of the objective measurements. Wandsworth gets the largest amount of damping grant because it has the largest cut. Labour Members are busy trying to make party political propaganda out of an honourable and decent thing—which is to cut where cutting must take place.
I will consider my hon. Friend's suggestion for the next time, but I warn him that everybody feels one way if they benefit and the other if they do not.

Mr. David Rendel: Does the Secretary of State agree that it is a peculiar anomaly that capital spending by local authorities from capital receipts is still frozen when the Government insist that the Ministry of Defence's capital receipts are 100 per cent. spent this year in MOD spending on revenue or capital?

Mr. Gummer: The capital receipts that arise from this year—the parallel that the hon. Gentleman would be making—are available for spending in local authorities, so he cannot object to that. That is one thing that we did this year for a particular reason, and I know that the hon. Gentleman will be pleased about it.
Also, capital receipts are not frozen. They are available to pay off debt. Labour Members do not appear to understand that when one borrows money, one has to pay it back—which is why they have always got the economy in such a mess. That is why they talk about freezing when in fact it is available for the spending for which it ought to be available. Labour and Liberal councils have a great deal of debt to pay off before they start lecturing us.

Mr. Patrick Nicholls: I wonder whether I have understood the position correctly in respect of Devon. It seems that my right hon. Friend responded to the case that I and a number of west country Members of Parliament put to him and to his predecessor over a number of years—that SSAs do not necessarily reflect the amount to which Devon should be entitled. If that is correct, and if more money could now be spent on, for instance, education, can my right hon. Friend say anything to ensure that the money really does go on education and is not just frittered away by the Liberals who control the county council?

Mr. Gummer: My hon. Friend and his Devon colleagues have an honourable record in pressing the case for Devon with the Government. When the various items that he raised were looked at properly, it resulted in Devon receiving a better share of the cake. That money can be spent by his county council as it thinks fit. It will be up to him to point out how much is ill spent by the


Liberal-controlled local authority. As this is a universal element in Liberal control, he will not have much difficulty in pointing it out.

Mr. David Clelland: In his examination of the all-ages social index, did the Secretary of State give any consideration to the introduction of an economic deprivation factor into the SSA for other services—parks, recreation and environmental services? Is he aware that that would be a fairer system than the all-ages social index, which has Cambridge and Cheltenham more deprived than Newcastle? Not only would it increase spending in deprived areas by reducing bills, but it would save money for the Treasury—the Chancellor might be interested in this—by reducing benefit levels. Will he look again at the all-ages social index and consider introducing a much fairer system than we have now?

Mr. Gummer: I am happy to look at anything that the hon. Gentleman puts before me. I have already looked carefully at that and I think that he will be pleased with the economic index that we have put in which takes particular care to deal with unemployment and long-term illness—two things which the hon. Gentleman and many of his colleagues thought were important. I am happy to say that the changes in the SSA have improved the SSA in Gateshead and Newcastle upon Tyne, in one case by 4·1 per cent. and in the other by 4·8 per cent.

Sir Rhodes Boyson: I welcome as reasonable the 2·4 per cent. increase all over the country, but we are obviously concerned for our own areas. Is my right hon. Friend aware that last year the London Boroughs Association considered that we lost £200 million from London to the rest of the country and we would like it back? Is he also aware that, if we are using the figures from the 1991 census, London will be disadvantaged because so many people disappeared down black holes so that they did not have to pay the poll tax that up to 10,000 were missing from any one constituency, and there is no consideration for that?

Mr. Gummer: I understand my right hon. Friend's concern. He will be happy to know that the damping grant of nearly £19 million ensures that the loss in Brent would not be more than 2 per cent. With the damping grant, London as a whole will receive an addition of £200 million.
That is in stark contrast to the statement by Mr. Toby Harris, the leader of the Association of London Authorities, who said on the radio this morning that London would lose more than £800 million. Mr Harris's figures were £1 billion out. The only comparable error in figures was made this afternoon by the hon. Member for Blackburn (Mr. Straw). It seems that innumeracy is a quality shared by most Labour local government spokesmen.
Despite that, there is a particular problem with Brent. [Interruption.] Happily, the new authority in Brent has improved things considerably after Labour-controlled Brent produced one of the worst examples of local government in the country, if not in the world. Part of Brent is moved to the neighbouring borough under the reorganisation. That causes a specific difficulty, but I shall be happy to talk to my right hon. Friend about that. He will be pleased with the increase in money coming to London.

Mr. Peter Shore: Is not it the case that, as a result of the review of SSAs and the changes in the additional education needs allowance, most inner London boroughs have suffered serious losses? Is not it absurd that areas of inner London which are extremely deprived in all sorts of ways and which show signs of serious social deprivation should be losers rather than gainers in the review of SSAs? Can the right hon. Gentleman tell us the net loss for the inner London boroughs as a result of his new settlement?

Mr. Gummer: The right hon. Gentleman gives a curious example, because six inner London boroughs gain and six lose. They do so by an objective system. We have sought to make the system as objective as possible. The result is that, for example, Greenwich has a 7·6 per cent. increase, Southwark a 3·8 per cent. increase, Barking an 11·8 per cent. increase, and Hillingdon, an outer London borough, a 7·8 per cent. increase. The right hon. Gentleman's borough has a 4·3 per cent. increase. I will be happy to send him the detailed figures for inner and outer London.
We have devised objective methods, many of which were introduced because of requests by the Labour party, on the long-term ill and unemployment, which were specifically raised with me when I visited the right hon. Gentleman's borough. As we listened to the requests of the Labour party and made changes from which his borough benefited, it is churlish of the right hon. Gentleman to suggest that there is something wrong with a system that is designed to do the best we can. Perhaps he would like to rethink the way in which he put his question.

Sir Cranley Onslow: My right hon. Friend will remember a deputation of Surrey Members visiting him and making a strong case about the unfair way in which the system of calculation has worked against the interests of the residents of Surrey. What has he been able to do to put that right?

Mr. Gummer: My right hon. Friend advanced a strong argument in the discussions. It upsets me considerably when the Opposition suggest that we run the system so that certain authorities benefit and others do not. We cannot do that. We apply the same criteria to every authority. The result is as good as it can be—as fair a balance as is possible between the various authorities. It so happens that, when we followed that policy, my right hon. Friend's contention proved to be true. That is why Guildford has an improvement in its SSA of 6 per cent. and Woking of 7·2 per cent. Those who object to our policy are objecting to a system that tries to take into account the objective methods that the Labour party asked for.

Mr. Stephen Byers: Will the Secretary of State confirm that the 2·3 per cent. increase in the education SSA for next year provides a figure that is about £232 million less than the amount being spent in our schools this year? Does he recognise that £232 million is equivalent in cash to 9,096 teaching jobs? How can cuts of £232 million in the school budget, threatening more than 9,000 teachers' jobs, be reconciled with the Chancellor of the Exchequer's statement on Tuesday that the Budget would increase education opportunities and improve standards?

Mr. Gummer: I understand that the hon. Gentleman has not had much time to look at the figures——

Mr. Straw: He needs more time.

Mr. Gummer: He does need time because he is comparing two different figures. He is comparing the outturn figure at the end of year with the total standard spending figure at the beginning of year. The outturn figure is always higher than the TSS figure. One should take the two figures that are comparable. There is no way around that. It is like comparing the budget of a company with its spending at the end of the year. One should compare budget with budget and outturn with outturn. If one compares the TSS this year with the TSS last year, one finds that there is a 2·3 per cent. increase.
The hon. Gentleman will find that we have spent a good deal of time in ensuring that our priorities, one of which is education, get a disproportionate increase so that we not only safeguard but improve services. The hon. Gentleman should compare like with like. The figures that he gave therefore are not true because he compared two totally different figures when he should have compared the same ones.

Sir Paul Beresford: Does my right hon. Friend agree that comments such as those made by the Labour leader of the ALA are pitiful, given the incompetence of the authorities that he represents, of which the collection of the council tax perhaps is an example? Many of those authorities are now suffering in their budgets the effects of the sale and lease-back nonsense of the 1980s.

Mr. Gummer: My hon. Friend is right. It is perfectly true that some authorities do a very poor job for their council tax payers. I think, for example, of the London borough of Lambeth, where the council tax is significantly higher than it would have been had it not been for its incompetence in collection and its long history, which is now having to be paid for. However much better it may get year by year, its council tax payers are still bearing the burden.

Mr. John Fraser: I thank the Secretary of State for recognising that things are getting better in Lambeth. I recognise that there are swings and roundabouts, but will he confirm that the extraordinarily high SSA reduction grant of £21 million in Hackney, £22 million in Lambeth and, most of all, almost £28 million in Wandsworth underline and show a pretty gigantic shift in resources as a result of changes in the SSA, at least for those three London boroughs? What is the net loss for those three boroughs as a result of the change in the SSA and, since this very high special subsidy is only temporary, at what rate will it be withdrawn, because does not that presage some horrendous problem for Tory and Labour boroughs as a result of the change in the SSA calculation?

Mr. Gummer: I have always tried to encourage wherever possible. That is why I said the nicest things that I could about Lambeth, but it started from an absolutely appalling base and almost anybody could do better. I hope that it will continue to try to do so.
The hon. Gentleman must accept that we have tried to apply precisely the indexes that the Labour party wanted. The result has meant a shift of resources from Lambeth to Greenwich, to Southwark, to Barking and to Hillingdon. That is perfectly understandable and it is disclosed by the figures. It underlines, I fear, the fact that the Lambeth council has been less good than it should have been.

Wandsworth, however, has a very low council tax. It has very good services. It is a very good council, and if Lambeth had done as well as Wandsworth the people of Lambeth would be very pleased indeed and would be prepared to accept the change because they would know that their council had properly looked after their resources.
I shall write to the hon. Gentleman with the detailed points that he wants.

Mr. Anthony Coombs: I welcome the change in calculating the SSA for day visitors, which should benefit a constituency such as mine that has many visitors, but have my right hon. Friend and the Home Secretary received representations from West Mercia police authority about the level of civilianisation that it has been able to achieve and whether it has been adequately reflected in the way in which the police block of the SSA is calculated?

Mr. Gummer: I thank my hon. Friend for his question. We have reflected in the police block grant the various changes that have been made in the SSA. I am pleased that Wyre Forest has an improvement in its position of 11·2 per cent., which reflects a real problem that he has so often raised with me and my predecessors.

Mr. Clive Betts: I have major reservations about the total size of the cake, but may I give some recognition to the fact that the Secretary of State and especially the Minister for Local Government and Planning have gone some way to recognising the representations that have been made by the Webber Craig authorities and Sheffield, in particular on the economic index, including unemployment, ill-health and homelessness?
I draw the Secretary of State's attention to a problem that is facing those authorities, of which I hope he will take account. It arises where an authority has had its SSA relatively increased, reflecting the fact that in the past it has done relatively badly. In those circumstances, the year-on-year expenditure capping rule bites heavily on those authorities and means that they cannot take full advantage of any increase in the SSA that is available. Will the Secretary of State be willing to take account of that problem and reconsider the capping rules?

Mr. Gummer: I thank the hon. Gentleman for his balanced comment and I hope that other Opposition Members will take seriously what he says.
Sheffield has a 4·9 per cent. increase in its SSA. That is another example to give the lie to the, I think, outrageous comments of the hon. Gentleman about the way in which that is done. I hope that in a quieter time he will wonder to himself whether it is proper to suggest that a system is run in order to benefit one party or another when it manifestly is not. Of course I have thought about the matter. I have made my provisional statement today; and obviously things are provisional until they are confirmed. I have heard what the hon. Gentleman has said and will think about it.

Mr. Patrick Cormack: Does my right hon. Friend accept that the thought that he has put into this subject and the skill with which he has presented it would have been easier to appreciate if we could have had the papers earlier? Is there not a case, on this statement above all statements, for Members to have the papers an hour or two before the statement is made in the House? So


that I can tell my people in Staffordshire their fate, will my right hon. Friend say precisely what has happened as a result of the representations that we made?

Mr. Gummer: It is difficult, I know, for everyone to take in the figures all at once, but my hon. Friend might like to look at page 8 from which he will see that South Staffordshire has an increase in its SSA of 21·7 per cent. I imagine that he will be able to put that over pretty clearly without any warning or advance notice.

Mr. Ron Leighton: As the Secretary of State knows, last year the London borough of Newham, in the east end of London, was short-changed by more than £22 million. That was because of a defective capital SSA and because the borough had to spend more than £11 million on homelessness, for which there was no SSA. Therefore, the council could not spend up to SSA on a range of services, including, for example, education. As a consequence, I went to a school in my constituency this morning where the gym could not be used because of the rain coming through the roof. Has the Secretary of State's statement today rectified the situation or made it worse?

Mr. Gummer: The hon. Gentleman's borough has an SSA per head of £1,143. One ought to remember, when dealing with London, that the per head SSAs are still clearly ahead of those anywhere else in the country. If the hon. Gentleman fears that under-registration of the type that he thinks may have distorted the census will make a difference·he did not say so just now, but I have heard him say it before·I want to ensure that he realises that that has been taken into account by the OPCS and that the figures have been adjusted to take that into account.
The London borough of Newham is one of those which has a reduction in its SSA, and that reduction·which is why, no doubt, the hon. Gentleman mentioned it·will mean that there is a damping grant of £13 million which goes to Newham to ensure that there will not be a reduction of more than 2 per cent.

Mr. Roger Knapman: I congratulate my right hon. Friend on his statement and especially on the increase of 2·3 per cent,. which well exceeds the prevailing rate of inflation, and also on some sensible amendments, especially regarding the ACA.
I ask my right hon. Friend, either now or perhaps later, to turn to annex 4, page 8, where we have the figures for Gloucestershire, with six councils, of which three, including Stroud, have almost identical populations, but unfortunately Stroud seems to have only £8·5 million SSA compared with considerably more than £10 million for the other two. That seems to be because the external funding for Stroud, with 105,000 people, is only a little more than that for the three smaller and rural councils in that county. I should be most grateful if my right hon. Friend would reconsider that aspect of what is otherwise an excellent statement.

Mr. Gummer: I shall be happy to give my hon. Friend a detailed explanation. His SSA increase is up by 7·6 per cent., so he can tell the people of Stroud that his pressure has at least brought about that result.

Mr. Clive Soley: Will the Secretary of State explain to me and to the people of Hammersmith and Fulham what has changed in Hammersmith and Fulham that results in the council·which has met the

Government-approved target of £169 million and received the accolades of a number of Ministers on its transport policy, its anti-crime policy, some of its housing policy and so on—still having to confront an enormous cut, in effect, bringing it down to about £145 million or £150 million? How on earth is that to be explained to the people of Hammersmith and Fulham, and will the right hon. Gentleman receive a deputation from the council to argue for some cushioning of that enormous impact?

Mr. Gummer: There is considerable cushioning·£18 million of cushioning·in order to meet the requirements exactly. The reason that Hammersmith and Fulham has had a reduction in its SAA is that, if one applies the specific objective tests which the Labour party was among the most vocal in demanding, Hammersmith and Fulham has a smaller SSA and Greenwich, Southwark, Barking and Hillingdon—all Labour-controlled boroughs —have an increase in their SSA.
I am afraid that if one has objective changes there will be some winners and some losers. I am happy to meet a deputation, however, and will provide them with all the figures.

Mr. Bob Dunn: Does the settlement for Dartford reflect the fact that that council is liable to incur extra costs in the next year in developments for and leading to the east Thames corridor? If there is no reflection in those figures of such expenditure, is my right hon. Friend open to suggestion on that subject?

Mr. Gummer: I shall be happy to meet my hon. Friend on that basis. Dartford has an increase in its SSA of 12·2 per cent., but that would not reflect that item.

Mr. Kevin Barron: Will the Minister tell us whether an authority such as mine that has had an increase in excess of inflation under the recalculation of the SSA for which my authority has been arguing for years will now be allowed to increase its expenditure to that level so that the proven need in the borough can be met? Or shall we be given the money with one hand but be restricted from spending the money to meet that need because of the right hon. Gentleman's calculations on the cap?

Mr. Gummer: The hon. Gentleman is right in that Rotherham has an increase of 5·3 per cent. and I am pleased about that because it underlines the fact that the fears of Rotherham have proved to be ill founded. The difficulty is that Rotherham is already spending significantly more than its SSA and therefore the permitted increase in budget will only be 1·8 per cent. That in itself is a significant change and I am sure that the Rotherham council will make the best use of it.

Mr. Nigel Waterson: Does my right hon. Friend agree that my constituents in Eastbourne will warmly welcome what I calculate to be nearly a 12 per cent. increase in SSAs over last year? May I take this opportunity to congratulate him and his colleagues on their skill and patience in tackling issues such as the day visitors statistics, which have had such a direct bearing on the calculation of SSAs for resort towns such as my own?

Mr. Gummer: My hon. Friend is right that the increase is about 11·7 per cent. for Eastbourne and 12·2 per cent. for Wealden. In both cases there is a high proportion of older people and there are necessary alterations because of the number of day visitors to Eastbourne. That is a fairer


representation of the needs of Eastbourne. I am pleased that my hon. Friend has acknowledged it and thank him for his remarks.

Mr. Nigel Spearing: Does the Secretary of State realise that his statement will be regarded by the people of Newham as one of the most unjust and harsh statements that he has made? He has just admitted that the SSA for Newham will be reduced by up to 2 per cent. and that that of his hon. Friend the Member for Eastbourne (Mr. Waterson) will be increased by 10 per cent. Is he aware that the London boroughs of Hackney, Tower Hamlets and Newham are three of the most deprived in the country? Can he tell us about homelessness? Does he not realise that £11 million of expenditure has to be taken out of the expenditure for the other services? Yet he has not taken much account of that because he did not deny the charges that my hon. Friend the Member for Newham, North-East (Mr. Leighton) made a few minutes ago. Does he realise that his 40-minute lecture to us in West Ham town hall about partnership is just empty claptrap when there is that type of deal?

Mr. Gummer: I would have expected better of the hon. Gentleman. I have heard him debate many times and he has always tried to be assiduous in his comparisons. I do not think that he has mentioned that the SSA per head in Newham is £1,143 and that in Eastbourne it is £120. It seems to me that that represents a fundamental recognition that Newham is to get an enormous extra amount of money.

Mr. Spearing: Education.

Mr. Gummer: r: I have to tell the hon. Gentleman that, even if spending on education is taken into account, a considerable amount of extra money goes into Newham, because of its difficulties. But when we compare Newham —[Interruption.] The Labour Front-Bench spokesman is right to say that we should compare like with like, and compare Newham not with Eastbourne but with places similar to itself, such as other London boroughs. The fact is that, applying the same criteria, when the deprivation is measured and all the figures are added up, Barking, which is not a million miles from Newham, has an increase of 11–8 per cent., whereas Newham has a decrease. I did not invent that; it happens as a result of applying the same criteria. Opposition Members have wanted us to use those criteria for many years, and it is not acceptable for the boroughs that are adversely affected by those criteria to complain while Labour Members whose boroughs benefit hardly say thank you.

Mr. Michael Bates: Will my right hon. Friend confirm that the increase in the SSA for Langbaurgh, a Labour-controlled authority, is an unparalleled 20 per cent. this year? My constituents will appreciate that, as they have appreciated the courteous and thorough way in which my right hon. Friend and his colleagues have conducted the negotiations over the SSA this year. Does my right hon. Friend agree that the generous settlement will mean that there is no excuse for Langbaurgh council not to get a grip on its finances, and no excuse for any increase whatever next year for the long-suffering council tax payers of Langbaurgh?

Mr. Gummer: Langbaurgh does not have a reputation as a well-run authority, so I hope that my hon. Friend will continue his pressure, and tell the council that we have recognised its particular difficulties, which he has often graphically described to me, and that the formula now takes account of them. The council is therefore now in a position to complete its half of the bargain—that is, to become a more tightly run authority and to use its money more effectively, thus demanding less from the people who pay its council tax.

Mr. Doug Henderson: I was worried by the Secretary of State's response to the question asked by my hon. Friend the Member for Wallsend (Mr. Byers). The right hon. Gentleman appeared to tell the House that it was inappropriate to compare next year's budget with this year's expenditure. I should have thought that there were enough Members on his side of the House who could have advised him on financial matters and accountancy procedures, and told him that no company in the land would prepare a budget for next year without considering this year's expenditure.
Is it not irresponsible for the Government to say that it is not fair to compare next year's budget with real current expenditure? Does not the current level of spending determine the level of police services, fire services, education services and social services? If there are cuts in the budget, those services will suffer. Will the Secretary of State not own up to the fact that the real impact of the financial settlement that he has announced will be cuts in
services and jobs, and that he expects local authority employees to bear the full burden of his surrender to the Treasury?

Mr. Gummer: If the hon. Gentleman wants to make a comparison with business, I might point out that most businesses will be looking for ways to save on overheads this year; they are not looking forward to the 2·3 per cent. increase that local government is being offered. The hon. Gentleman will probably realise that at such a time as this businesses will deal with the problems that arise when we are coming out of recession by seeking to tighten their belts more than the Government have suggested. The figures are not such as to make local authorities throw their hats in the air, but they expected the settlement to be a good deal tougher. They did not expect an increase of 2·3 per cent. I must tell the hon. Gentleman that every year the outturn figure is higher than the total standard spending.
We need to compare like with like. The first rule for reading any kind of balance sheet is to compare this year's figure with last year's figure, but one must ensure that those figures refer to the same things. To compare this year's figure with last year's figure, when wholly different factors were involved, does not lead to sensible accounting. Perhaps that is why all Labour Governments get themselves into a financial mess. Perhaps that is what the Labour party has been doing all along the line, and it still has not learnt.

BILL PRESENTED

COAL INDUSTRY

Mr. Secretary Heseltine, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Gummer, Mr. Secretary Hunt, Mr. Secretary Lang, Mr. Secretary Mayhew, Mr. Secretary Redwood and Mr. Tim Eggar, presented a Bill to provide for the establishment and


functions of a body to be known as the Coal Authority; to provide for the restructuring of the coal industry, for transfers of the property, rights and liabilities of the British Coal Corporation and its wholly-owned subsidiaries to the other persons and for the dissolution of that Corporation; to abolish the Domestic Coal Consumers' Council; to make provision for the licensing of coal-mining operations and provision otherwise in relation to the carrying on of such operations; to amend the Coal Mining Subsidence Act 1991 and the Opencast Coal Act 1958; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 4.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [30 November].

Orders of the Day — AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply, acquisition or importation:
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies, acquisitions and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Kenneth Clarke.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

The Secretary of State for Employment (Mr. David Hunt): I warmly welcome my right hon. and learned Friend the Chancellor's statement. He has emphasised the progress already made towards our central goal—the achievement of sustained non-inflationary growth. We have not wavered from that goal in difficult times, and we shall not depart from it now, especially as recovery is so well under way.
My right hon. and learned Friend is to be congratulated on the skill with which he has constructed his first Budget. I am especially pleased that he has enabled me to announce today the details of our new scheme for apprenticeships and credits, in which I am pleased to say that my Department will invest £1·25 billion over a three-year period, in addition to expenditure of £900 million on youth training over the same period.
Training is not some homogeneous good to be hurled indiscriminately at young people. To be really worth while, it must be based on mutual responsibility and a high level of motivation. In the social market economy, both employers and employees should take clear responsibility for their development. Training is in the best interests of the individuals who receive it, and it is in the best interests of the companies that employ them, which is why industry's investment in training held up so well during the recession.
However, we can always do more to strengthen the incentive to train and to reaffirm the key mutual commitment between the trainee and the employer, so today I want to give details of our plans to introduce a system of new modern apprenticeships.
To remain competitive, our industries need an increasing number of people qualified to the key technician and supervisor levels. They, in turn, need high-quality work-based training, to defined standards; in other words, we want all the good features of traditional apprenticeships leading to a recognised qualification, and modernised to avoid time serving.


I am today inviting training and enterprise councils to prepare to offer a full range of modern apprenticeships to young people in all parts of the country. I am also asking them to prepare to offer youth credits to all young people who leave school at 16 or 17 by 1995, so that credits will be the mechanism to give young people access to modern apprenticeships, as well as to other forms of work-based training.
I am also inviting industry training organisations to work up model schemes of training to national vocational qualification level 3 or above. As the House will know, that is equivalent to A-level standard. Those schemes will describe what young people can expect to achieve and set out clearly the milestones on the way to becoming qualified.
I want apprenticeships to be developed in all sorts of sectors and occupations. Of course, we need modern apprenticeships in engineering. We want electronics and mechanical engineering skills to be brought together, for example. We also want new, modern apprenticeships in areas such as financial services, in hotel and leisure management, in catering, in distribution, in the care sector and in science-based technology industries such as biotechnology. We want apprenticeships in information technology, as it applies across a whole range of sectors and right across the chemical, petrochemical and plastics industries.
I also want to involve small and medium-sized employers as well as big employers. I want to see apprenticeships offered equally to young women as well as to young men. The modern apprenticeship needs to be open to every young person to whom it would be of benefit. I want every apprentice to sign an apprenticeship pledge with an employer. That will clearly set out the training the apprentice can expect to receive, and what, in turn, the employer will expect by way of progress and it will enshrine the commitment of each party to see the training through to successful completion. Ideally, it will set out an intended path to a job once the apprenticeship has been successfully completed.
I want to see apprenticeships on offer to the school leavers of 1995 and I want to be able to run pilot schemes in 1994. That will be a challenge because there is a great deal of work that needs to be done and many people will need to play a part. Today, I have written to invite all the main organisations to come in for consultations, including, of course, the national council of the training and enterprise councils and the Confederation of British Industry. I have written to the Trades Union Congress, the National Council for Education and Training Targets and the National Council for Industry Training Organisations. I look forward to receiving their views and also to seeing the first training models that industry will develop in consultation with my Department as soon as possible.

Mr. John Prescott: Is the Secretary of State admitting a failure in Government policy on apprenticeships, because in 1979, according to his Department's figures, there were 367 proper apprentices, as he describes them, and in the past year there were 240, after he had dismantled 26 training boards? Was that a failure of policy and is the right hon. Gentleman attempting to correct it in a "back to basics" approach?

Mr. Hunt: No, I am not. I do not accept that at all. I do not want to engage in a negative discussion. I could describe in graphic terms how the old, male and trade union-dominated apprenticeship system was destroyed, but I shall not look to the past. If the only area of disagreement between myself and the hon. Gentleman is to be the past, then I look forward to the future with him. I noticed that the hon. Member for Stretford (Mr. Lloyd) spoke in the debate on national education and training targets and I have made it clear that I am prepared to extend the same invitation to him and his colleagues so that we can talk through how best to introduce the new, modern system of apprenticeships. I also extend that invitation to the other parties.
Instead of looking back, we can look forward. Thanks to the labour market flexibility, we can look forward with much more confidence than ever before. I believe that the atmosphere is right for an initiative of that sort and I invite all-party agreement on that point.

Mr. David Madel: My right hon. Friend referred to the employers' responsibility in the welcome work-based training opportunity for young people. If an employer runs into financial difficulty and cannot run the training, is there to be a back-up system whereby work-based training can be resumed elsewhere?

Mr. Hunt: I am setting out the framework and funding of the scheme today. I am perfectly prepared to state clearly that the Government will invest £1·25 billion in credits and apprenticeships over the next three years. Obviously, it will now be up to employers to respond with the detailed structures that they believe best suit their industries and companies.
My hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) raised one special problem which I will, of course, consider, but I cannot hold out any hope of immediate alleviation of that problem because we want the maximum number of apprenticeships to be agreed with industries and employers. It is up to them to come forward with the way in which they would like to proceed.
It may help my hon. Friend to know that I expect that the new programme will build up to about 150,000 apprentices in training at any one time under the new, modern apprenticeship system. The financial settlement that my right hon. and learned Friend the Chancellor has allowed gives a real increase in the funds available. Our average investment in guidance and training for young people will rise in real terms by 25 per cent. over the three years. That is a measure of the importance that we attach to apprenticeships in a tough year for public expenditure. Like health and education, training is a clear priority for the Government.
My right hon. and learned Friend's Budget has already resulted in several messages of support, including a telephone call from the new director general of the Engineering Employers Federation which represents 5,000 engineering companies. He welcomed the announcement of
modern apprenticeships that are linked to achievements and competences
and I believe that his view is echoed across the country. I look forward to working with others who are keen to make the new apprenticeships a success.

Mr. Alex Carlile: So that the House can assess the right hon. Gentleman's apparently welcome announcement, would either he or the Minister replying to


the debate tell the House whether his apprenticeship scheme involves additional spending by the Department of Employment? If that is so, how much will it be and where will the cuts in the Department of Employment's budget come from, as outlined on page 117 of the Red Book?

Mr. Hunt: At the moment, there is a rising number of young people staying on at school—a few years ago, the figure was 48 per cent. and it is now 71 per cent. As a result, the youth training programme is declining substantially and it is underspending this year, as I have just revealed in a parliamentary answer, and is likely to underspend further next year. My right hon. and learned Friend the Chancellor's Budget has allowed me not to impose the cuts which would have obviously followed, but to introduce a new, modern apprenticeship scheme to run alongside the youth training scheme and, in addition, to provide a rising tide of expenditure. That is the simple answer to the hon. and learned Gentleman's question and I am perfectly prepared to invite him and his colleagues to see me to go through matters in more detail.
The key to modern apprenticeships, for which I believe many right hon. and hon. Members on both sides of the House have been pressing, is the qualification to NVQ level 3, which is equivalent to A-level. Provided the scheme is a success—I hope that everyone will work to make it a success, as the preliminary signs are good—we shall see more than 40,000 youngsters on that scheme every year working to NVQ level 3—more than three times the present number in factories, businesses and companies. We have an increasing gap at technician and craft level and we intend to more than meet that need in the economy.

Mr. Geoffrey Clifton-Brown: Does my right hon. Friend recognise that the proposal is an investment in our young people for the future which will be of benefit to all businesses for many decades to come?

Mr. Hunt: Yes. I agree with my hon. Friend that it is a tremendous investment in the future. It is no use the Labour party trying to downgrade NVQ level 3 to NVQ level 2. We are talking about a new skill target which is the equivalent of A-level. I want 150,000 new apprentices to reach that A-level standard in NVQs as soon as the scheme is up and running. I believe that all hon. Members will recognise the significance of that when they pause to think about it for a moment.

Ms Angela Eagle: Will the Secretary of State comment on speculation in the press today that the cuts in unemployment benefit and the potential gathering together of the administrative arrangements for the payment of income support and of the new job seeker's allowance will lead to the abolition of the Department of Employment, which will make a fundamental difference to the administration of some of the schemes about which he is talking? Has the right hon. Gentleman really co-operated with the Chancellor of the Exchequer to abolish his own job?

Mr. Hunt: I am disappointed that my constituency neighbour, the hon. Member for Wallasey (Ms Eagle), should so quickly seek to urge me to do myself out of a job. Any structures within Government are, of course, a matter for my right hon. Friend the Prime Minister. I believe very strongly that the new modern apprenticeship system and the fact that the Department of Employment is right at the

heart of Government economic policy are good indications of the importance that the Government attach to employment and training policies, as I have just said.

Mr. Mark Wolfson: Does my right hon. Friend agree, in speaking further on the welcome news, that there is also a social dimension, which will benefit the country, in increasing the number of apprenticeships for young people? What will be the driving force in determining how many people go into particular apprenticeships? Will the job prospect at the end of an apprenticeship be a key factor?

Mr. Hunt: I agree with my hon. Friend. The key consideration in the new scheme is the ability to extend it and to spread it to a number of industries that do not have a tradition of apprenticeships as well as to the industries that have. With the old-style apprenticeships, the emphasis was very much on time serving. The emphasis in the new modern scheme is on reaching NVQ level 3, the equivalent of A-level.
Much will depend, to answer my hon. Friend's point, on the models and schemes coming forward. Much will depend on which industries and which employers seize the initiative now and work closely with the organisations involved and with the training and enterprise councils. I shall, of course, talk to the Trades Union Congress about how best to extend those schemes in the way that it feels is right. Bill Jordan plays a key role in NACETT. He has already made it clear that we need such a scheme, which I am happy to discuss with him, if we are to meet the ambitious national training and education targets.
I was also pleased that my right hon. and learned Friend the Chancellor was able to refer in his Budget statement to the fact that unemployment is already down by 137,000 this year. By contrast, I have been asked by a number of my right hon. and hon. Friends whether I will look up the equivalent figures for the rest of the European Union. I can reveal them to the House now. In the past 12 months, unemployment registers in the European Union as a whole rose by 1·6 million. There is only one country in the Community where unemployment is now below the European Union average and falling. That country is the United Kingdom.

Mr. Prescott: I am sure that the House is grateful for that information; we welcome any reduction in unemployment. I have looked at the figures for the 14 years under the Government. I must tell the Secretary of State that the number of years for which our figures have been below the European average is three plus one—four altogether. Those are the only times this country has been below the European average level for unemployment.

Mr. Hunt: I suppose that that comment makes a change from the comments made by the hon. Member for Holborn and St. Pancras (Mr. Dobson). He used to say that we were fiddling the figures whereas the hon. Member for Kingston upon Hull, East (Mr. Prescott) now says that we are fiddling with figures. However much the hon. Gentleman may try to make a noise in the Chamber, he cannot deny the fact that unemployment in the United Kingdom has fallen by 137,000 this year whereas it has gone up in the resit of Europe by 1·6 million.
Last month, I was able to announce a fall in unemployment of 49,000. In France, Mr. Giraud had to announce an increase of 40,000. In Germany, Dr. Blum


had to announce an October increase of 56,000. Even in Spain, with its smaller population, Mr. Martinez announced an increase of 56,000 in October.

Ms Glenda Jackson: The Secretary of State referred to figures. I am sure that he will not dispute figures emanating from the Department of Employment—the quarterly employment estimates for November 1993. The Department says that the number of people in employment had fallen by 508,000 from June 1992 to June 1993, and that in October 1993 the number out of work for more than two years was 42 per cent. higher than in October 1992 and 92·7 per cent. higher than in October 1990.

Mr. Hunt: I am not sure why I gave way to the hon. Lady. She omitted to mention two key statistics. I shall answer her question, but I shall then not give way for a little while. The first key statistic is that, last quarter, long-term unemployment fell for the first time in three years by 10,000. Secondly, according to the latest available statistics, the work force in employment rose over the three months by 42,000. That is an upgraded figure.
Let us get the whole matter into context and recognise how right my right hon. and learned Friend the Chancellor was when he reminded the House that unemployment was falling right across the United Kingdom. It is falling in every region of the United Kingdom and it is falling for both men and women. Two thirds of those who become unemployed leave the register within six months. Most welcome of all is last quarter's fall in the number of long-term unemployed people, which I have just mentioned to the hon. Member for Hampstead and Highgate (Ms Jackson). That offers real hope to all unemployed individuals that the misery of unemployment will soon be behind them. The figures are remarkable.
The House may well ask why unemployment is falling at this time. I believe that there are four reasons. First, the recovery started in the first half of 1992. Since then, our gross domestic product has increased for six quarters in succession and it is now up by 2·4 per cent. over the period.
Secondly, the population of working age is stable and there are no longer large numbers of people coming on to the labour market. I remind the House that, over the past 10 years, the number of people in work in the United Kingdom has increased by 1·3 million. There are now 1·3 million more people in work than there were 10 years ago. As output rises, employers take on more staff, and unemployed people are the main source of additional recruits.
Thirdly, the labour market is now much more flexible. Deregulation and curbs on the abuse of trade union power mean that employers have the confidence to recruit people quickly to keep pace with increasing sales and output.
Fourthly, my Department offers more help than ever before to get people back into work. There are now 1·5 million opportunities on offer to unemployed people, and they work. Last month alone, 487,000 people left claimant unemployment, which is the highest monthly figure ever recorded. Those are the reasons unemployment is falling, and in a modern, open economy, by far the best contribution that Governments can make to prosperity is to promote supply-side measures to help industries to be

more competitive. That is why the Department stands centre stage as part of the Government's economic strategy.
We are contributing all the time to job creation through our systematic deregulation and our progress in improving the United Kingdom training system. Continuing to reduce unemployment is a priority in my right hon. and learned Friend's Budget. From next April, the lowest rates of national insurance will fall by a full percentage point, so reducing non-wage costs—already among the lowest in Europe—by £1 billion in a full year. That will benefit all employers.
It is evident in the modern economy that small and medium-sized enterprises are the real engines of job creation. Small firms also need to be encouraged to invest in training their employees. I have, therefore, today announced three new measures to encourage smaller companies to boost their training efforts.
First, I am developing with three high street banks—Barclays, Clydesdale and the Co-op—arrangements for career development loans to be extended to small firms. Firms will benefit from an interest-free holiday during the period of training, and the Government will guarantee the loans. Once the necessary arrangements have been made, loans of up to £125,000 will be available from early in the next financial year.
Secondly, I am giving special help to small firms to achieve the Investors in People standard. I shall remove the requirement on those with fewer than 50 employees to make a matching contribution when working towards Investors in People.
Thirdly, I know that employee development programmes of the kind developed by Ford have proved remarkably successful, giving people control of funds for their training. Many training and enterprise councils are already supporting companies in developing such arrangements. I want TECs to encourage them further, in particular in small companies or groups of companies.
Taken together, the measures form a powerful set of incentives for small firms. They are good news for small firms and they are excellent news for all those who are looking for work.

Dr. Jeremy Bray: The Secretary of State has been properly exercised in his office by announcing the new Government policies. Is he aware that when he was talking about announcing unemployment figures he made a slip of the tongue? It is not his job to announce unemployment figures; they are announced by statisticians in his Department. Government statisticians are having the greatest difficulty in re-establishing the integrity of Government statistics and trying to establish that it is not Ministers who are constantly cooking the books. Will the right hon. Gentleman therefore make it clear that it was not he who announced the unemployment statistics, but the statisticians in his Department?

Mr. Hunt: The only reason statisticians find their position undermined is that the antics of Opposition Members cast doubt on the statistics.

Mr. Bruce Grocott: The Secretary of State said that the key reason for what he described as the "improving" position is the increased flexibility of the labour market. On behalf of many thousands of people, I put it to him, with all the urgency that I can muster, that


what he sees as flexibility of the labour market is seen by many thousands of people as casualisation of the labour market.
I know of firms in the midlands that lay off 100 people on one day and the next day offer most of them short-term contracts. I know of a youngster who has worked for the same firm for one and a half years on the basis of 70-odd weekly contracts. Is that the way in which the Secretary of State wants the labour market to develop? That is deeply damaging not only to individuals but to the stability and security of our society.

Mr. Hunt: I do not accept any of that. I wanted to give the hon. Member for Kingston upon Hull, East an opportunity to get into the debate, but I will not be able to do that if there are lengthy interventions from hon. Members who get upset if I do not give way.
If the hon. Member for The Wrekin (Mr. Grocott) looks at the labour force survey, he will find that the accusations of substantial increases in temporary and casual work are completely without foundation. The number of permanent jobs is increasing—there are now more than 20 million. The hon. Gentleman does his area a grave injustice by seeking to paint an alternative picture that has no truth and foundation whatever as a general statement of policy.
My right hon. and learned Friend the Chancellor announced several initiatives to improve the operation of the labour market. The new job seeker's allowance, to be introduced in two and a half years' time, will be an important step forward in the help that we provide for unemployed people. The name of the new benefit demonstrates a shift in focus; we are making it clearer than ever before that people will get benefit because they are seeking work, not because they are passively unemployed.
Everyone who is genuinely looking for work will be entitled to the new benefit for as long as he or she needs it. Those who have paid the requisite national insurance contributions will be entitled to a personal allowance for six months, regardless of their income, their partner's income or any savings.
At the heart of the new job seeker's allowance is new clarity about a principle that has underpinned our system of support for job seekers from Beveridge onwards: the principle of mutual responsibility between the state and the unemployed individual.

Ms Glenda Jackson: rose—

Mr. Hunt: I have given way to the hon. Lady already. Just as the state has a responsibility to support unemployed individuals, individuals have a responsibility to make every effort to find new work.
To make that duty clear from the start, we shall be introducing, with the job seeker's allowance, a job seeker's agreement. Each claimant will have to reach an agreement with his employment service adviser, identifying from the outset the steps that he will be taking to get back to work. He will then have to put that into action.
Last year we introduced job plan workshops. They have already given positive help to more than 112,000 people, with a success rate of more than 90 per cent. Building on that, I am today announcing a new restart course for those who have been out of work for more than two years.
I am also introducing three new pilot schemes in advance of the introduction of the job seeker's allowance. We shall pilot a job finder's grant, paying up to —200 to people who find work after being unemployed for two

years or more, to help with the initial expenses of returning to work. We shall be setting up two further pilots to test new approaches to getting young people back to work as quickly as possible. Those measures will further improve our help to job seekers.
I very much welcome the Chancellor's announcement introducing, from October next year, new disregards for child care costs in working out families' entitlements to family credit, disability working allowance, housing benefit and council tax benefit. That will help 150,000 families, and it will make more explicit the Beveridge principle that the best way off benefits is into work.
That could be worth up to £28 a week in family credit alone, and will provide a powerful incentive for families to move back into work and be better off. It will particularly help those lone parents who want to work but have found that child care costs represent a barrier. That is in addition to the £45 million programme run by the TECs, under my Department, for out of school child care. That programme will create 50,000 new child care places.
The Government attach the highest possible priority to increasing the number of jobs, reducing unemployment and looking after those who most need help. But it is industry and enterprise that create jobs. Everyone of working age should be given every incentive and every opportunity to contribute. Economic growth on its own is not enough.
Much of the industrialised world has discovered the phenomenon of jobless growth, and Europe is particularly afflicted. Between 1979 and 1989—the Organisation for Economic Co-operation and Development economic cycle—the United States economy grew by 32 per cent. and the number of jobs grew by 18 per cent. In the same period, the economy in Europe grew by 24 per cent. but generated only 4 per cent. more jobs. As a result, unemployment in Europe has now reached 19 million, and it continues to rise. In general, it is where labour markets are most flexible that jobs are created. The United Kingdom has the most deregulated labour market in Europe and we have more of our people in jobs than any other major country in Europe.
When my right hon. Friend the Prime Minister went to Maastricht, he was presented with a social protocol that would have given European trade unions a direct role in legislating and opened the door to a whole raft of expensive burdens on business. That would be bad for Britain and bad for Europe, so my right hon. Friend had the courage to refuse to sign up to it.
Last month, the leader of the Labour party—I am pleased to see him here—was presented with a proposal for a statutory 35-hour week in the United Kingdom. That would cost our industries £20,000 million a year and prevent 14 million of our citizens from working hours that they want to work. That would be a very bad thing indeed. The right hon. and learned Member for Monklands, East (Mr. Smith) has said so himself.
I have to apologise to the socialists because I have done them an injustice, for there is an opt-out at the end of their manifesto. It is for a country whose Conservative leadership fought long and hard to be excluded from the most intrusive European legislation. The socialists recognise that, and an opt-out was agreed. Lucky old Denmark.
The Labour party did not fight for an opt-out. Its leader just signed up, on the basis of sign first, ask questions later. Having signed up in Brussels, the Labour leader now claims to have experienced a mystical conversion on his


aeroplane home. The hon. Member for Kingston upon Hull, East now says that there is a difference between the words "must" and "could". I agree that there is. I have the official document, distributed at the press conference at which the hon. Gentleman was present, and the word "must" is there. His leader signed up for "must" and not for "could". That is the difference.
The hon. Member for Kingston upon Hull, East has now given me a version that substitutes "could" for "must". Could he not go a step further? Could he not substitute "ought not to" for "must"? Perhaps it would be easier to say "must not". The charter which I have here, which is the unexpurgated version, states clearly:
These measures must include a substantial cut in working time, to ensure a better division of the available work.
I know that Labour Members pretend that the document does not exist, but it does. Let me quote Glyn Ford, Member of the European Parliament, who has said that the Members of the European Parliament are going to campaign in favour of a 35-hour week across the EC. So, Labour still clings to the discredited social protocol.
Our partners, right across Europe, are abandoning that protocol and everything for which it stands. Increasingly, they recognise that there is a connection between job creation and deregulation and they are coming to see the social protocol as an expensive luxury. As Britain leads Europe out of recession, the argument is moving our way. Flexible labour markets and high standards of education and training are widely acknowledged as the twin routes to success. Modern apprenticeships, the new schemes for small firms and the job seeker's allowance are all part of an on-going revolution that will continue to release the enterprise of our people and create jobs for them. I commend the Budget, which is a Budget for jobs, to the House.

Mr. William Cash: On a point of order, Madam Deputy Speaker. In an otherwise superb speech, my right hon. Friend the Secretary of State for Employment used, as have other Ministers, the expression "European Union" in rather an extravagant and broad manner. This afternoon, in response to a parliamentary question that I tabled a couple of days ago, the Secretary of State for Foreign and Commonwealth Affairs made an authoritative statement on the Government's policy in respect of the use of the expressions "European Union" and "European Community". He said:
Government policy is to use the term 'European Community' when describing matters specific to that pillar and to use the term 'European Union' when referring to all three pillars collectively or to matters specific to the two inter-governmental pillars outside the Community.
Would you be good enough, Madam Deputy Speaker, to take account of that when the expression "European Union" is used in the rather loose manner employed by the BBC and the Financial Times and now by some Ministers?

Madam Deputy Speaker: The hon. Member has made his point, but it is not a point of order for the Chair. Mercifully, the Chair is not responsible for the accuracy or otherwise of what hon. Members say.

Mr. John Prescott: The Secretary of State has been kind enough to say that he might have to leave before the end of the debate because his wife is going into hospital for an operation. I am sure that the House will join me in offering best wishes to his wife, and to him. I shall fully understand if he has to leave the debate. I hope that he will understand that I shall be harsh in my criticism of his Department. The debate is a bit of a surprise, because I thought that it would come on Monday. Things have changed rapidly.
I am delighted to see the Chancellor here with us as we debate the Budget. I recall that we both took part in a debate in 1987, when he was Paymaster General, in which he defended the so-called Budget for jobs. Unemployment has increased by about 1 million since then, although he told us that that Budget would be successful. He told us that there would be more firms, but there are 100,000 fewer than there were then. He told us that there would be an explosion in training, but there are 100,000 fewer places. Those were the predictions that he made as Paymaster General.
The right hon. and learned Gentleman was right about one thing. He said that there would be considerable growth in the economy. There was indeed a massive growth in the economy, with an increase of more than 1 million jobs, showing that if the Government feel that it is a priority they can create many jobs. The trouble was that it was one of those dashes for jobs—the booms and busts—so much associated with Tory Governments. Then the brake was put on—not on the expenses or wages of Members of Parliament, but on the unemployed. After that boom came the general election, and then 1 million people were thrown back on the dole. This Budget is designed to do something similar. Rather than dealing with the problems of today, it is designed to deal with any problems that might arise before the 1996 elections. However, I shall address myself to the problems of today.
The Budget is not a Budget for jobs. On his own admission, the Secretary of State expects it to create more unemployment. It is not a Budget for industrial investment. That will not be enhanced by the policies. It is not a Budget for ordinary people. It is a Budget for the City. If there is any doubt about that, I will quote a paper not known as a Labour paper—the Evening Standard. On Tuesday, I picked up the "West End Final", which said, "£15 billion share boost". That was while the Chancellor was speaking. Within half an hour of his sitting down, another "West End Final" was rushed out, which said, "£18 billion share boost". I picked up the Evening Standard again today and it said:
Nearly £25 billion has been added to the value of the shares since Chancellor Kenneth Clarke's Budget on Tuesday".
That is what the Budget is about—welcoming the City back to the casino economy. Nothing has changed in our economy, but all those people dealing in stocks and shares have decided that they can make a killing out of what the Chancellor has done. It is all about a City judgment.
I noticed that during his speech the Chancellor had a smile playing on his lips when he said that he was prepared to exempt wine for Christmas. When the people in the City are drinking their champagne and toasting the Chancellor, I hope that they will bear in mind the price of what they have done to the country.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): Will the hon. Gentleman at least acknowledge that the reason why shares were boosted so rapidly is that the people responsible for investing the pension funds of many working people were encouraged to invest that money in British industry? They thought that the outlook for British industry was improved by my Budget measures.
The hon. Gentleman is at least trying to adopt some sort of attitude towards the economy, which is more than the shadow Chancellor was able to do, but he is revealing a neanderthal approach to a free market economy.

Mr. Prescott: That is the second time I have been called neanderthal; it must be a strategy of the Tory party. First it was the Prime Minister, and now the Chancellor is saying "Get Prescott, the neanderthal man". The right hon. and learned Gentleman should address the arguments.
As to pension funds, the same headlines could be seen in newspapers in 1987 and the same people were encouraged to buy shares. The pension funds did not invest in manufacturing, but in property and assets other than manufacturing. That is what caused the problems in our industry.
I have heard many promises from many Chancellors and Secretaries of State for Employment about growth being around the corner, but I have yet to see it materialise. We will wait to see what this Budget produces. There is no doubt that it will have considerable consequences for many areas of our community.
The Budget does nothing for the workers, for the homeless or for the helpless. When the people in the City raise their glasses, I hope that they will bear in mind that what the Chancellor has done for their advantage will be at the expense of many people who can ill afford it.
Conservative Back Benchers who were cheering the Chancellor on Tuesday will perhaps pause to think when they are walking through that passageway that we all walk through and see that person wrapped up in blankets. The warmth that he got this morning was from a copy of the Evening Standard that he had stretched across him. The Budget offered him no possibilty of a job or an increase in the housing programme so that he might have a home. I hope that Conservative Members are a little ashamed when they walk past that person in the morning. I feel ashamed, but at least I shall be voting against the Budget. I hope that there are some decent Conservative Members who will rebel against the nature of the Budget and its unfair way of dealing with our people.

Mr. Jacques Arnold: If the hon. Gentleman thinks that the Budget is so inappropriate and awful, why is it that last year the Labour party produced a document entitled, "Labour's Budget Statement 1992-93" but this year it has not got one? Are they frightened of producing one or are they just plain incompetent?

Mr. Prescott: It may shock the hon. Member for Gravesham (Mr. Arnold), but we are the Opposition: our job is to address what the Chancellor has done in the Budget and to be critical of it or to praise it. For example, we think that the increase in child care benefit is an improvement and will be welcomed by all in the House. We have to address the essential thrust of the Budget.

Mr. Bernard Jenkin: Are we finally to hear, for the first time in the debate, what Labour party policy is—to produce a Budget that takes no heed of

City opinion? Does the hon. Gentleman recall what happened in the 1970s, when we used to have Budgets which did not take heed of City opinion and we ended up with the International Monetary Fund coming in to rescue the nation's finances?

Mr. Prescott: The hon. Member for Colchester, North (Mr. Jenkin) should have a chat with his father and discuss how his father's party handled the economy during his time. He would be reminded of the collapse that followed the boom of 1987. That was a mistake which did a lot of damage. It reduced skills, levels of employment and investment.
We now have a new Chancellor, and this is the Budget that he has produced to address our current problems. In the Budget he has started to target a lot of people who should not be so targeted. It always used to be the Church and the trade unions that were targeted. Towards the end of his speech, the Secretary of State said that the good old trade unions were being attacked again and that the Government would not be entering into consultations with them, whereas a few minutes earlier he had said that Bill Jordan would be walking in through the front door to discuss the apprenticeship situation with him. Will the Secretary of State be discussing that kind of problem as an act of charity, but not as a right? Everyone should have a right to make a contribution to discussing problems of this type.
I welcome the "back to basics" proposal for an increase in apprenticeships. The Government have seen a bit of sense and gone back to apprenticeships, which are badly needed. Even with the current small amount of growth in the economy, there is a shortage of skilled people. We shall not get an increase in jobs from the growth in the economy because of the lack of proper skills. That situation was caused by the bad decisions made by the Government 10 years ago.
The Government are targeting not collective bodies such as the churches and trade unions, but individuals such as the disabled, the sick and the unemployed. They have decided that people who are unemployed—and many have been unemployed for a long time—will have to prove that they are job seekers. I do not know what 2 million people will have to prove. It was always a requirement that a person had to be available for work in order to get benefit. If the Department had any doubt about a claim, it had all sorts of fraud squads to investigate it.
I wonder what the new procedure will be. Do the Government want these 2 million people to get an employer to sign to say that they had visited the company looking for work? I can imagine the personnel department of some small company having hundreds of thousands of people queuing up and saying, "To get my benefit I have to get a chit from you showing that I have been seeking a job."
It is all very well for Conservative Members to screw up their faces, but presumably some form of proof will have to be provided. Will what the counter clerk thinks about an applicant's statement that he has been looking for work be sufficient? If that statement is not accepted, will the Department adopt the procedure for suspending benefit? Benefit used to be suspended for six weeks, but it is now to be for 13 weeks—a doubling of the delay in payment. How will the proof be provided? We have heard the criteria, but what evidence will be expected from a person


who is on the dole? Those are major concerns for the unemployed, and why I say that we are targeting these people unnecessarily.
Mass unemployment, such as we have in this country, is the scourge of all developed economies. Anyone looking at unemployment in western economies will see that throughout the 1950s, 1960s and 1970s it doubled every 10 years. That has happened in every country. We can quibble about whether our employment is going up or down, but mass unemployment is a substantial problem in the developed western economies. It is also a problem with eastern economies, but I shall refer only to economies similar to our own.
We have to address that particular problem. Our argument is that unemployment has reached and is maintained at far too high a level. Mass unemployment is something that will continue for a very long time, and what the Budget will produce is a low-paid, low-skilled, low-cost and low-value economy. We have no chance of competing against the Pacific rim countries. We must go for a high-wage, high-productivity and high-value production economy.
Everyone agrees that that is what we must aim for, but to achieve it we must invest in education and skills. The Secretary of State has told us that the extra money for the apprenticeships, which we all welcome, will come from another part of his budget—presumably from the budget for training people who will not go into the apprenticeships.
Only a third of our labour force have any qualifications, whereas some two thirds of the German labour force have some form of qualification. We have a long way to go, and the strategy of the Budget to produce more low-paid, part-time, low-skilled jobs is fundamentally wrong.

Mr. Clifton-Brown: The hon. Gentleman is strongly criticising my right hon. and learned Friend's Budget for jobs. Perhaps he can explain something to me. France is likely to experience an increase in unemployment of 800,000 this year and Spain has an unemployment rate of 20 per cent. How can the hon. Gentleman think that we are so far out of line with other countries, especially as the hon. Member for Dunfermline, East (Mr. Brown) said the opposite? We have already heard from my right hon. Friend the Secretary of State for Employment that we have more than a million more jobs today than we had in 1979. How can the hon. Gentleman say that we are so far out of line with those other countries?

Mr. Prescott: If the hon. Gentleman had been listening instead of talking to his hon. Friends, he would have heard me say at the outset that mass unemployment has plagued all western economies and doubled every 10 years. Unemployment has increased under Labour and Tory Governments alike. My charge is that we have a higher level than is necessary and that things could have been done in the Budget to change that. Any silly fool can look at the figures and say that Spain and other countries are also affected. I conceded that right at the beginning. The hon. Gentleman would be better informed if he listened to what was being said instead of trying to jump in with questions that the Whips have given him to ask me.
The Budget is also designed to justify a wholesale attack on the welfare state. It is all very well the Secretary

of State quoting Beveridge and saying that that is what he wants to achieve. The fact is that at the heart of the Budget is the view that we cannot afford the existing welfare state. The Secretary of State and the Chancellor have admitted that mass unemployment—whether the figure is defined as 2·9 or 2·8 million, we have mass unemployment—will continue at least until 1996-97. I do not think that anyone doubts that mass unemployment will continue throughout the Government's period of office.
Another proposition that we can accept from the economists is that growth will not create enough jobs to compensate for the high unemployment that prevails in developed economies today. It is unlikely that the growth estimated by the Chancellor will materialise—indeed, it is being suggested in some newspapers that the tax revenue of some £30 billion that will come out of the Budget is likely to reduce those limited growth figures. But even supposing that the Chancellor's optimism proves justified and the growth levels to which he has referred are attained, it will not do a great deal to reduce unemployment and will certainly not cure mass unemployment. We are therefore faced with a decision. Are we prepared to fund the welfare state? Are we prepared to fund the unemployed and the disabled?
What has been done to benefits for people with disabilities would certainly appear to be an attack on them. Those same people were driven on to the disability list because in the mid-1980s the Government discovered that they could encourage people off the unemployment register in that way. The Department of Employment's own doctors co-operated in that exercise. As Members of Parliament, we all knew that people could get more money in invalidity benefit. We drove them off the unemployment register and now we are about to drive them back because the Chancellor has discovered that the cost is too high. It is a consideration of the cost and whether such benefits can be afforded. The criteria by which a person is judged to be disabled are to be changed.
We can see the good old hand of the Treasury in all this. The Government did the same in the Chronically Sick and Disabled Persons Act: when they found that more people were entitled to claim, they began to change the criteria and cut the cost. That is what the Budget is all about. We are talking not about meeting people's needs but about meeting the needs of the Treasury. That is at the heart of the Budget.
The Government have decided that they are not prepared to finance a welfare state. Under their present strategy, they cannot achieve growth and they cannot reduce the cost of unemployment, which is about —30 billion, quite apart from the loss of production. That gives rise to a major question, and the Budget sees us at the crossroads. What kind of society is Britain going to have? Is it to be one that balances work and welfare, which was at the heart of Beveridge, or is it to be one that lives with mass unemployment while seeking to eradicate it in the figures, eventually—I gather from rumours that are circulating at the moment—abolishing the Department of Employment on the ground that we will not then need a Minister to come to the House to explain why so many people are unemployed?

Mr. David Congdon: Is the hon. Gentleman saying that there is no case in any situation


for trying to constrain the cost of an ever-growing social security budget? If so, why did the Opposition set up the social justice commission?

Mr. Prescott: I am admitting that there is a fundamental question for us all to address. I do not think that there is any doubt that that question will be an issue at the next election. We are preparing ourselves for that argument and will have to present our case. Let us make no mistake about it. I am not arguing that there is no problem to be addressed, especially given that we are faced with mass unemployment. But decisions have been made about whether to give money to those who are well off or fund the welfare state, and the Government have decided to give tax benefits to those who are better off. That is what has created our problems.
The problem that the Chancellor has identified in his Budget is the public sector borrowing requirement. Let us leave aside for a moment the question whether the PSBR is higher than that in other countries and how it is measured. Let us accept, for a moment, the Chancellor's view that the PSBR is far too high—and we could argue about that. The £30 billion cost of unemployment is very high indeed. It would be far better to get people to work rather than leave them to waste away on the dole.
Other factors have contributed to the crisis, too. The problems in our public finances are in part due to the policies that the Government pursued in the 1980s. They wasted £100 billion worth of oil revenue—£10 billion or £15 billion a year. They privatised nationalised industries, stealing the silver to put quick money into the Treasury's coffers while losing the revenue flow from those nationalised industries—about £10 billion a year—[HON. MEMBERS: "No."]—£10 billion since they were privatised, then. As the Chancellor knows, we had both loss-making and profitable industries. But the net revenue was far higher than the tax that the Chancellor is collecting from the privatised industries. The Treasury has lost revenue. The introduction of the poll tax cost another £5 billion. The list goes on and on. The PSBR crisis has been caused not just by unemployment and welfare payments but by the Government's handling of our finances.
The Budget is being used to justify a massive attack on the welfare state in line with the Government's policy in Europe which is that we need to pursue the least cost option. That leads to low skill and to industries that do not have the necessary research and development and investment to produce the kind of wealth to pay for a modern welfare state.

Mr. Kenneth Clarke: The hon. Gentleman is arguing that the point of the Budget is to cut back on a welfare state that we will not afford. Will he remind himself of the social security spending figures announced in our spending plans? The hon. Gentleman will see from the Red Book the changes that the Budget represents. In social security, the changes from previous plans are as follows: for 1993-94, £2,300 million extra; 1994, £1,600 million extra; 1995-96, £2,100 million extra. We have accommodated that increase of more than £5 billion by reordering priorities elsewhere.
The hon. Gentleman has fairly praised the introduction of the child allowance and family credit. Whatever else he says, it is absurd to argue that the whole basis of the Budget is that we are not affording a welfare state. We are making

proper provision for a welfare state but it is sensible to stop benefits being paid to those who were never entitled to them to accommodate growth in requirement.

Mr. Prescott: Expenditure on the welfare state has increased under all Governments. That is part of the problem. The Secretary of State has identified some growth but there have also been cuts. With ever increasing and mass unemployment, he has to pay more. I should add that, in a low-wage economy, income supplements and so on become available to part-time workers. Is it the Chancellor's view that we can afford the welfare state and the present expenditure pattern?

Mr. Clarke: We are demonstrating that we can. But the welfare state has been evolving ever since it was first introduced. It has never been a static social security system. I cannot recall a Government who have made no changes to social security for two or three years at a time. We are introducing new benefits for working mothers and there has been increased take-up of desirable benefits. The hon. Gentleman is standing there resisting attempts to cut fraud and to stop people claiming invalidity benefit when they are not entitled to it. That is an irresponsible approach to the welfare state, and an approach that the Government certainly do not share.

Mr. Prescott: It was unfortunate that the Chancellor used the word fraud, and it is fraud in the context in which I use it. The Secretary of State talks about a welfare system based on national insurance principles, and he is going to deny unemployed people the entitlement to 12 months' benefit. That is their right under the national benefits as they are. They make contributions and they are entitled to the benefits. If a private company did something similar, would it not be taken to court?

Mr. Clarke: The hon. Gentleman is challenging the part of the job seekers' benefit which states that one is entitled to benefit only if one is available for work. If the hon. Gentleman resists that element of the job seekers' benefit scheme, which is designed to ensure that people do not claim the benefit when they are not seeking work, he is resisting quite legitimate proposals to stop people claiming benefit fraudulently by pretending to look for work.

Mr. Prescott: The Chancellor has given a clear indication of how he stands on the matters. In my previous job, I made an allegation about the Chancellor—then the Secretary of State for Transport—when we were in opposition on another case. After what he has done to the railway pensioners with their pension funds, he is undoubtedly now about to raid the pension funds of the Post Office and the coal mines. There is no doubt about that. The right hon. and learned Gentleman told the railway workers that he intended to set them up with a self-funded pension fund which would have no accountability to the Secretary of State. He has since taken money from them, and he is now threatening their assets.

Mr. Clarke: indicated dissent.

Mr. Prescott: The Chancellor may sit there and shake his head, but it is a matter of record. The Government are robbers, and they are involved in an act of fraud. They should make no mistake about it—that fact is known by the electorate. The electors know what the Government are about—it is clearly evident to them.


The Conservative party is no longer credible in relation to a tax hike. It is a party that does not believe in high taxation. The Chancellor gave an interview on a radio programme in which he said, I believe, that it was now necessary to increase taxes. That will be done presumably to provide an opportunity to reduce them again at the time of a general election. That is how the Government play see-saw with the economy at the expense Of the unemployed and the homeless.
One would have thought that the Department of Employment would be concerned about employment, but all that it has done so far is to encourage low pay. The Department and the Chancellor have designed a national insurance scheme which is a pathway to lower pay. There is an incentive now to employers to pay less, because the employer will make smaller national insurance contributions if they pay a worker less. That might be an incentive to try to get people at lower pay. If a mountain is built of people who are working part time, the employer will be encouraged to pay less and less. People will have less money to meet their needs. The justification given for the national insurance contribution scheme is that it will benefit employers—the consequences for employees are considerably different.
We hear a great deal about the deregulation of our economy. I wonder whether the Secretary of State might have told us whether he would guarantee in that deregulation that we will not see a reduction in health and safety regulations. Those regulations are contained in a clause in a provisional Bill to which my hon. Friend the Member for Rother Valley (Mr. Barron) referred. Many people are concerned about this. Will the Secretary of State guarantee that he will not change the essential principle in the Health and Safety at Work Act 1974 which is
designed to maintain or improve the standards of health, safety and welfare established by or under those enactments"?

Mr. David Hunt: indicated assent.

Mr. Prescott: I take that nod from the Secretary of State to mean that he will not change the health and safety legislation which has contributed to the reduction in the number of deaths and accidents in industry.

Mr. Hunt: The hon. Gentleman seems to be relying on the Chancellor and me to make his speech for him. I will make it absolutely clear. We have consistently stated that the review of health and safety is to make the system safer and simpler. We have asked the Health and Safety Commission to give us advice on a range of issues, and we now await that advice. I am proud to say that we have one of the finest health and safety records of any country in the world.

Mr. Prescott: The Secretary of State must be aware that that is because of the essential principle embodied in the legislation that any changes in safety regulations must be superior to the provisions that they are to replace. It is a simple principle. Do the Government intend to change that in any way? We have seen a Bill which contained that clause. Are they saying now that it will not be done? I should be grateful if the Secretary of State would make such a statement. That is equally as important as the apprenticeships.

Mr. Hunt: indicated assent.

Mr. Prescott: I take that asurance from the Secretary of State to mean that it will not be changed. I am grateful to him for that assurance. That will be good for our people, and I am delighted about it.
On the business of departmental deregulation and the job seeker proposals, is not the rate of applicants to jobs either 21:1 or 35:1, depending on which area one takes? What is the point of a job seekers' scheme if people have no chance of getting jobs?
That ratio of applicants to jobs works against the 1 million long-term unemployed in particular. What is the position for them? The Secretary of State has acknowledged that special measures are needed for them, but employers will not deal with those measures. How are the long-term unemployed to be dealt with under the schemes? The Department has no sympathy for them. To see the ineffectiveness of the Department, we must look at the way in which it has dealt with education and skill training. That is a most critical area, as the Secretary of State made clear at the beginning of his speech. We welcomed that, and I presume that he did so at the beginning of his speech to catch the evening news, knowing that presumably we would not be able to comment. That is the nature of the organisation of business in the House.
The Secretary of State says that we are to return to basics. I will give him the figures concerning apprenticeships in this country. In 1979, there were 367,000 apprentices. In 1992, there were 240,000 apprentices. That is largely because the Government scrapped the training boards from which many of the skills came, whatever else was said about them. There has been a massive reduction in the numbers.
The Secretary of State has talked of 10,000 to 40,000 apprentices. I could not keep up with the right hon. Gentleman because somehow he shot off to talk about a figure of 150,000. I do not know what period of time he was talking about. I understood that there were to be 10,000 national vocational qualifications, rising to 30,000 or 40,000. Is the figure of 150,000 to be achieved in the next century? [Interruption.]

Madam Deputy Speaker: Order. It does not make for clarity when there are signs, whispers or seated interventions. The House must return to the normal way of conducting business.

Mr. Prescott: If the total of apprentices reaches the figure of 150,000 that the Secretary of State wants by the next century, that will be 10 per cent. of the number of trainees in Germany now—an ambitious programme indeed to get Britain going into the next century and to produce the skills which we want for our industry. It is absurd—absolute nonsense.
The figure is so low because the Government do not have the guts to tell industry that it must invest in people and in skills. If it is left to a voluntary system, industry will not do it. All the countries with skill training have a statutory framework and a levy principle. We broke away from that and since then we have seen a collapse in training, even in limited skill abilities which have always been a problem in Britain.
Now the Secretary of State comes along and looks at NVQs and training and enterprise councils and tries to deliver some sort of apprenticeships. I hope that he is


successful, because we desperately need those apprenticeships, but it is not enough: the Government must tell industry that it has to make a proper investment in the training of our people. That might need a compulsory element, but every other country in Europe has such an element.

Mr. Hunt: indicated dissent.

Mr. Prescott: The Secretary shakes his head, but he does not have the problem of not getting a job because he has no skill. That is reality for many of our people. Those are the consequences for our young people who have no jobs or training.
While I was getting ready for the debate, I read some of the promises made by previous Secretaries of State. They told the House what they were going to do to train youngsters aged between 16 and 17, but not one of their promises was ever achieved. All the promises were given with great confidence, but the record of the Department of Employment in producing people with skills is deplorable. That is quite apart from what that has meant for the economy. Industry should be ashamed of what it has done for the training of youngsters in this country. The Government are concerned with creating a low-pay and unskilled sort of economy. That is not the way Britain will go forward.
The Department of Employment talks a lot about the importance of skills, but even in that area it is a complete failure. It has failed to train a labour force, to implement fair employment practices and conditions and to influence a policy of full employment.
I was interested to hear the Secretary of State say that the Department of Employment was at the core of economic policy. I wish that it was, along with the Department of Industry. But I did not think that the Government believed in strategy for industry or for employment. I thought that that was all given to us by the market.
I want to see Departments making a judgment and being actively involved and intervening. That is what happens in many European countries with Governments of the left or right. They need to plan, to intervene, to have objectives, to help industry and to train people. The Government have a role to play in that. But during the 1980s the Government copped out of that. The Department of Employment has been at the heart of doing basically nothing about it. It should be a powerhouse. That is important.
The Department of Employment could have done more to shape economic policy. I am glad that the Secretary of State acknowledged that it should have such a role and that will be a basis for part of our debate. The Treasury, in pursuit of money to reduce subsidies and to deal with the financial crisis that has come about as a result of its economic incompetence, has sought financial solutions which have been to the detriment of our economy.
The deregulation of the bus industry led to the collapse of a manufacturing industry. In order for the Treasury to save £100 million in subsidies, 7,000 buses have gone down the Swanee and a whole manufacturing industry has gone.
I hear that the Government are now talking about the west coast main line. Two years ago I put forward a plan to finance that line with leasing and new forms of private financing. The Government have not yet learnt those methods, despite them being used in Europe. Under such a

system we could combine training, modernising the infrastructure, providing manufacturing jobs and developing our roads.
The Department of Employment should be arguing with the Treasury about how to produce jobs, provide a modern economy and train people, rather than skivvying around to get a few bob more from the Chancellor, complimenting him on that and then discovering that that money has simply come from another part of the Department's budget.
The Chancellor has given the Department of Employment nothing. Its money has been going down and down. If one excludes the unemployment benefits, it has had nothing. It is the handmaiden of the Treasury. It has not been the core of decision making where it should be. If it considered industrial policy, it could have been.
One thing that the Department could have done in the light of the Budget announcement of a cut in MIRAS, which, along with local authority housing cuts, will result in savings of about £1 billion, was to transfer that money to rebuild a housing programme.
Those savings under MIRAS could have been used to provide 100,000 houses and 100,000 jobs. Those figures are available. Instead of the Treasury using that money to pay the City so that it can have its profits, it should have been used to meet the needs of the homeless, to provide jobs and to stimulate the economy.
I intend constantly to return to what I call the jobs audit. We do not necessarily need to spend more money, rather to choose different priorities in order to get people back to work. The Government deliberately do not choose those priorities but rather maintain a high level of unemployment. Does the Secretary of State know what effect the Budget will have on jobs? Did he ask the Chancellor? Did they do a job audit? Did he ask how much unemployment would be created?

Mr. Hunt: First, a few moments ago, the hon. Gentleman referred to unemployment benefit being taken out of my Department's expenditure, but it is the Department of Social Security's budget; it is not in try Department's budget.

Mr. Tony Lloyd: Yes, it is.

Mr. Hunt: It is not.
Secondly, this is a Budget for jobs and growth. We will see the results as the months and years unfold. The hon. Gentleman still has not explained why the United Kingdom is the only country with unemployment below the Community average and falling. In every other part of Europe, it is rising.

Mr. Lloyd: How many jobs?

Madam Deputy Speaker: Order. We cannot have intervention upon intervention, particularly when they are made from a sedentary position.

Mr. Prescott: The Secretary of State is right; I did use those words. I was referring to employment services—payment for training, and so on. That correlates with what is happening in the economy, and if that figure is excluded there has been a reduction in his Department's budget. Even if it is included, one could say that there has been a reduction.
But, leaving that aside, the Secretary of State said nothing about the Budget's consequences for jobs. This is


not a Budget for jobs. There are many different computer forecasts to play with. I shall use the one from Warwick. Cuts in housing and in local authority expenditure and the pay freeze for public sector workers mean that more people will be put out of work. That is the reality. There is no doubt about that.
Estimates can be made. They are constantly made. The Department of Social Security estimates the effect of its policies on unemployment. It has been shown that 250,000 public sector jobs and 75,000 manufacturing jobs—325,000—will be lost. To keep those people unemployed will cost £3·5 billion. Why do we not consider that? That is a charge on the public sector borrowing requirement. Why are we not concerned to reduce the borrowing requirement by reducing the number of those whom we pay to keep idle on the dole? Would not that be a better way to use money?
Housing cuts will cost a further £1 billion. There is only house building at the moment, no other construction. If the housing programme is reduced, as the Chancellor described—the Financial Secretary is here, he can confirm that—the inevitable consequence will be fewer people in work. Already, the building industry accounts for 250,000 unemployed people.
The Secretary of State's rhetoric shows that he wants to be at the heart of economic decision making. But one would have thought that a Secretary of State for Employment might have asked the Chancellor in the run-up to the Budget what its effect would be on jobs. He might have done and the Chancellor would have said, "Don't worry, there will be a growth in jobs." To which the Secretary of State would have said, "Thank you very much, Chancellor." Then he would have moved on.
The reality is unemployment. If the Secretary of State is in any doubt, he can ask the Financial Secretary about the consequences to the public sector borrowing requirement of the money that is being settled for the local authorities and the cuts in housing. The subsidies will go directly to the Treasury, not to the housing industry.
In reality, the Government are not interested in unemployment. If the Secretary of State accepts the consequences for jobs that I have just described, he is choosing higher unemployment than is necessary. That is our charge against the Government. They do nothing to provide homes for the homeless, skills for the unskilled, jobs for the workers and help for the helpless.
Our charge is not only that the Government are uncaring; they are incompetent and deliberately maintain high levels of unemployment. That is what this Budget is about and that is why we shall oppose it bitterly during its progress through the House.

Mr. David Madel: In the early part of his speech, the hon. Member for Kingston upon Hull, East (Mr. Prescott) welcomed the new apprenticeship scheme that my right hon. Friend the Secretary of State announced, and I hope that he and the representatives of the Liberal party will join the cross-party discussion and co-operation to get that important scheme off to a good start. We all know the necessity of giving

young people good training, and the atmosphere will be hugely helped if there is seen to be cross-party support on that.
I welcome the Chancellor's firm restatement in his Budget speech of Conservative philosophy—a modern welfare state, a competitive British economy with low inflation, and a country that vigorously pursues policies which remove obstacles to an expansion of world trade.
The unified Budget has made economic policy more coherent to people and it has given us a chance for a much wider debate on the Budget than usual. I for one hope that the unified Budget will stay.
The Chancellor fully delivered his pledge to help all pensioners and the less well-off in the commitments and the figures that he gave with regard to VAT on fuel. I am also glad that he coupled that with a £35 million per year increase in the home energy efficiency scheme.
I previously had a financial interest in the window business. I no longer have such a interest, so I no longer feel inhibited in speaking about it in the House. I therefore looked up the 1990-91 regulations governing the making of a grant under that scheme. Among other things, they refer to a grant being made for draught-proofing and the insulation of any hot water tank or cylinder which is not already insulated.
What is missing from the regulations is the need to replace windows. If windows and external doors were replaced by double-glazed sealed units, fuel bills would drop considerably. We always want to take action to help people to reduce the amount that they spend on fuel. I hope that the regulations will be amended to enable people to obtain a grant to fit new windows and external doors if necessary. Ill-fitting windows and external doors add hugely to people's fuel bills. The regulations should be amended so that people can take advantage of my right hon. and learned Friend's welcome extension of the home energy efficiency scheme.
In his Budget statement, my right hon. and learned Friend said that a good social security system was one under which the better-off and people in work pay to support the poor and the disadvantaged. I support that view. However, there is one area where that aim does not fit, and that is the Child Support Agency. Many fathers on modest incomes are struggling to bring up a second family and simply cannot pay what is now being demanded by the CSA. Those fathers often made maintenance arrangements in a court of law, but the agreed figures have been overturned by the CSA.

Mr. Alex Carlile: Does the hon. Gentleman agree that the position is even worse than he has described because, in a matrimonial breakdown, it is now virtually impossible for solicitors to advise either fathers or mothers on any financial settlement, due to the unpredictability of the demands being made by the Child Support Agency?

Mr. Madel: I am glad that I gave way to the hon. and learned Gentleman. I am aware that he is a distinguished lawyer. I am sure that Ministers will have heard his point. Indeed, the Government are urgently investigating the matter.
Where there have been sudden changes to various payments, the Government have often introduced transitional relief. Therefore, a good first step might be for some form of transitional relief to be introduced in maintenance payments. That would help those who are


suddenly faced with the CSA overturning court orders. It is a serious problem, and the CSA's behaviour is contrary to my right hon. and learned Friend's philosophy on the welfare state and social security system—the better-off helping the less well-off. "Better-off' simply does not apply in many CSA cases.
My second brief point on social security is that we should never underestimate the damage done by the late Mr. Robert Maxwell to faith and confidence in private and occupational pensions. Maxwell pensioners are by no means out of the wood. A considerable number of them live in my constituency, and it is the deferred pensioners, in particular, who are racked by uncertainty and anxiety.
I am delighted that my right hon. Friend the Secretary of State for Social Security is to introduce changes to the system. We need a battery of new laws to ensure that never again can some Robert Maxwell wreak havoc on those unfortunate enough to work for such a company. It is a thoroughly welcome change in the social security system. In a constituency like mine, with hundreds and hundreds of Maxwell pensioners, it cannot come quickly enough.
My right hon. and learned Friend referred to motor taxation. We cannot say that we have not been warned about future increases in fuel duty, in addition to those announced on Tuesday. It should accelerate research and development into even more fuel efficient engines. That in itself should create new jobs.
However, I ask my right hon. and learned Friend to keep two points in mind. The first is the future of the vehicle excise duty—the tax disc. There is a case for freezing that cost. My right hon. and learned Friend has frozen mortgage interest relief at £30,000, but there is also a case for freezing the tax disc, especially in view of the plans to increase fuel duty.
Secondly, we should not forget that world oil prices are now at a very low level. If they suddenly shot up again because of tremendous instability in the middle east, I hope that my right hon. and learned Friend would reconsider his projected increases in fuel duty. Rocketing oil prices, plus his proposals, would place the car industry in considerable difficulty, and put a considerable burden on motorists and other consumers.
The other interesting point mentioned by my right hon. and learned Friend in relation to the car industry and the roads programme was that, when the technology is ready, motorway electronic charging will be introduced. That, too, should result in new jobs as the new technology is developed. I am delighted that the Government have opted for pay-as-you-drive rather than a flat rate charge. We believe in a shift of taxation from income to spending, and that charge is a form of spending.
However, if electronic charging is introduced for certain stretches of motorway, some traffic will be diverted to A roads that simply will not be able to cope with such an enormous increase in traffic. That applies in particular to my constituency. The thought of traffic pouring off the M1 on to the overloaded A5 through Dunstable is too horrible to contemplate. Therefore, when the technology is introduced, it must take account of the fact that certain stretches of motorway must be free of electronic charging, because the A road system would not be able to take the sudden increase in traffic.
I want to say a few words about education. I welcome the Government's success in having already reached the target of one in three of our young people going to university. I doubly welcome the confirmation in the

Budget that university tuition will remain free. That is as good an investment in people as could possibly be imagined.
My right hon. and learned Friend referred to students' living costs, and said that the mixture of grant and loan would continue, with a movement away from grant and towards loan. I do not quarrel with that. Indeed, the Select Committee on Education and Science, on which I served, advocated that in the early 1980s. I hope that people will not forget the existence of the access hardship fund for students in difficulty. It is a scheme that the Government should certainly retain.
I am sure that there was a surge of relief in higher education and throughout the whole education system when it was confirmed that VAT would not be applied to books. Now that we have escaped that, we should refocus attention on the net book agreement. I understand that it is being considered by the Office of Fair Trading. I am sure that I speak for many hon. Members in saying that the price of books in this country is rather high compared with, for example, America. The net book agreement is not in the public interest. Books are an important part of student life, and prices could be reduced.
My right hon. Friend the Secretary of State for Employment mentioned the new apprenticeship scheme, which I welcomed in an intervention in his speech. is extremely good news that, when young people have that qualification, it will be the vocational equivalent of an A-level. I support the principle of high-quality, work-based training. However, I reiterate my concern: once an agreement has been signed between trainee and employer, were the company to go bust or get into severe financial difficulties, there must be a system to enable the young person to resume his work-based training elsewhere. That will require a great deal of employer co-operation.
The truck manufacturing industry in Dunstable collapsed last year—imagine the damage that that has done. Industries do go bust, so if we are to increase the number of apprenticeships, there must be a safety net so that, should the worst happen, the apprentice can resume work with another employer without delay.
My right hon. and learned Friend the Chancellor mentioned many times the need to get unemployment down. Two things are most desperately needed to achieve that. The first is a deal on GATT, and certainly before 15 December. Every post-war surge in prosperity has followed a reduction in restrictions on world trade.
Secondly, we must make the EC single market work properly and fairly. It is of the utmost importance to this country that our EC partners come out of recession quickly, because we are so desperately dependent on them for our exports. It is of the utmost importance that they, like ourselves, pursue policies that lower the costs of providing employment and thereby create more jobs.

Ms Eagle: Does the hon. Gentleman agree with the Budget's basic assumption that even the modest rates of growth that it predicts will be sustainable? As the hon. Gentleman pointed out, that will depend on the European Community emerging from its current deep recession, because it is one of our main export markets.

Mr. Madel: It is terribly important that the Community emerges from recession. I believe that the hon. Lady's constituency is near Ellesmere Port, where Astras are


manufactured. The Cavalier is manufactured in Luton, and both plants desperately need increased opportunities to sell to the Community.
The conditions for industry expansion are extremely favourable. Paragraph 3.12 of the Red Book refers to oil prices, and assumes an average price of$17 a barrel during the forecast period. Paragraph 3.19 states:
Low commodity prices and spare capacity in G7 countries should continue to exert downward pressure on inflation.
We have as good an opportunity for economic expansion now as since the end of the Korean war, after which there was a downward movement in world commodity prices.
We see the strains that high unemployment imposes on our EC partners, and must constantly look for new ways to boost manufacturing and business. I welcome the new venture capital trusts on which my hon. Friend the Financial Secretary will soon publish details and invite comments. It too will be a real job creator.
My right hon. and learned Friend stressed that his is a long-term Budget to secure a much better economic future. He rightly promised no overnight miracles. We on this side of the House must remember Rab Butler's philosophy about the patience of politics. My party must show great patience and support for the Government in the next few years as we move into faster economic expansion, low unemployment and, above all, lower inflation.

Dr. Jeremy Bray: The Chancellor's skill in designing his Budget was well demonstrated by the hon. Member for Bedfordshire, South-West (Mr. Madel), who is a man of broad sympathies and of views that I find more acceptable than those of some Conservative Members. I hope that that remark will not do the hon. Gentleman too much damage in his constituency.
The hon. Gentleman's ability to commend the broad sweep of the Budget, which adds hugely to taxation and makes such heavy cuts in expenditure, and to find details that he can also commend—and which we on this side of the House support, such as plans for road building and the introduction of road pricing—nicely characterises the Budget's shape as a political instrument.
As to the Budget's likely impact on the economy and its broad strategy, I will concentrate on what must be done now and in the future, and not parcel out credit and blame for past events and for the deplorable state of the economy today—with its huge imbalances of public borrowing, balance of payments and, worst of all, appalling unemployment.
First, I want to give the Chancellor more credit than he probably deserves. He is right to seek to reduce the public sector borrowing requirement by one means or another, not at once but over a period of five years. He is right to announce in advance changes in taxation and in planned expenditure levels that will make clear that balance for which he is arguing—realistically, as he sees it. However, I do not agree with the particular levels of taxation and expenditure that he chose.
Then there are matters on which I will reserve judgment. The Chancellor did not clearly explain his strategy for the balance of payments, the exchange rate and monetary policy. I do not suggest that he has no strategy or that his strategy is necessarily wrong—simply that he has

not explained what it is. The markets, to operate confidently, must have a clear indication of the Government's monetary strategy.
Finally, the Chancellor is plainly wrong to cling to deregulation and benign neglect of industry as the panaceas that will restore the competitiveness and capacity of manufacturing and make possible the reduction in unemployment that we all seek. However, overall, and given the political constraints within which the Chancellor is working, the right hon. and learned Gentleman did what I would expect a competent Tory Chancellor to do.
The competence was to a degree thrust upon him, perhaps without the right hon. and learned Gentleman entirely appreciating it, by the discipline of having to launch a unified Budget. That made him examine economic issues as a whole. I gave a push in that direction with my amendment to the Industry Act 1975 requiring the Treasury to publish economic forecasts.
From internal evidence and the Budget, I suspect that the Treasury, in its advice to the Chancellor, may have gone further with the optimisation of policy, which was also covered by my original amendment to the 1975 Bill, which the House approved. If the Treasury has not done that further work—there are many ways in which it can be done—it should have done so. I believe that the Economic Secretary knows what I am talking about.
Since before the 1987 stock exchange crash, I have been publishing the results of policy optimisation on the Treasury model, using the Treasury's own computer programmes. It is a simple concept. Having identified priorities on inflation, unemployment, taxation, public spending, public borrowing, the balance of payments and so on, a model embodying the available evidence on how the economy works will show the policy changes that should be made now and those that ought to be made in future.
Each year, I have undertaken post mortems on those exercises, which have shown that, if Chancellors had followed advice available within the Treasury at the time, they would have avoided the main mistakes made since 1987—most notably, the excessive reflation of 1987 and 1988.
Models and forecasts are certainly imperfect. That is as true of the Treasury model as of any other. This year, with the help of three good research assistants, I undertook that policy optimisation exercise on not only the Treasury but on the London Business School, National Institute of Economic and Social Research and Oxford Economic Forecasting models. I gave the results at a seminar at Warwick university in July. Alan Budd, chief economic adviser to the Treasury—who in the early 1980s was an adviser to the Treasury Select Committee when I was a member of it—commented extensively on that paper at the seminar.
The results of that comparative study of policy design and optimisation were published in the "Oxford Review of Economic Policy", a copy of which is in the Library.
A fortnight before the Budget, a new version of the Treasury model was produced, revised in respects that I and others showed had been wrong. I have not had time to study the policy recommendations to which that new version leads, but with the revisions to the model to which the Treasury has drawn attention, I expect it to indicate the sort of Budget and forecast that the Chancellor produced.
For that reason, I do not question the likelihood that the figures produced by the Chancellor are based on the best


advice that he has received within the Department. I may be naive in that, but I am prepared to believe the attempt at objectivity in those forecasts.
That optimisation exercise, which has been or could easily be done in the Treasury, will show a consistent exchange rate and monetary policy strategy which the Chancellor did not announce in the Budget. As I have said, there is no monetary or exchange rate policy in the Budget.
All that does not mean that the results presented in the Budget could not have been achieved by other arguments or on the back of an envelope. The Treasury model is not a black box. The way it works is consistent with the economic common-sense terms in which the conclusions would, I am sure, have been presented to the Chancellor. A test of good methodology is that, after the event, everybody claims to have known the answer.
On the evidence that is published in the "Financial Statement and Budget Report", the exchange rate is vulnerable to the intractable deficit in the balance of payments. To have run a balance of payments deficit in the depths of a recession and not to offer any recovery to zero, even after the depreciation that we have had, and to stop short of the publication of the forward look into future years is at least to fail to produce the evidence that a monetary and exchange rate policy is sustainable and consistent with the fiscal balance.
To put the balance of payments right, supply side measures are needed which are not treated in the Treasury model. It does not treat the further deregulation and benign neglect of industry which has been pursued by the Government and which is recommended for future years, nor the effects of similar policies which will now be incorporated in the model and which have been shown to be insufficient in the past.
Also, it does not treat the positive supply side measures of the Labour party on investment, training and research, to which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) referred, which Conservative Members are bored with us constantly reiterating, but which are important.
Why has not the Chancellor set out an exchange rate and monetary policy strategy if his advisers probably have a good one under the table? First, he or his advisers may feel that they want to see more of how the strategy performs. That is wise in the light of the nostrums that we have had in the past and the experience of past monetary and exchange rate strategies. Evidence from all sources must be examined, and this is no exception.
Also, nobody but the Treasury and the Federal Reserve Board in Washington is equipped to do the sort of policy optimisation work on the Treasury model that I believe the Treasury has been doing. Academic modellers, the Bank of England, City economists and even journalists could do it, but they are not doing so. The technical details are fiddly, but the methods are well within the competence of intelligent graduate students, who can learn them in three months, though not at any British university.
In monetary and exchange rate policy, we are dealing with influencing people's expectations. It is no use the Treasury using an argument if its listeners are not equipped to follow that argument and react to it. The game does not work if one is seeking to influence people's expectations and they are not doing the sums necessary to work out how to form their expectations. They have to learn to play the game. If that game does not work for the Government, how

much less will it work for the Opposition, given the barrage of misrepresentation to which the statements of Opposition Front-Bench spokesmen are subjected?
We are now past the stage where politicians and their advisers cannot understand the arguments that are needed on monetary and exchange rate policy. It is the public and the pundits who need to catch up. No Chancellor has adequately acknowledged the sheer technical competence and integrity of Treasury modellers and forecasters—a competence and integrity so inadequately portrayed in the anodyne caricature of analysis which successive Chancellors serve up in the "Financial Statement and Budget Report". Of course, forecasts are not accurate., so let the forecasters explain why, and what the implications of that inevitable uncertainty are for policy-making, as I have tried to do.
The body in this country that looks at the development of models and forecasting is the macro-economic modelling consortium on which the three bodies represented are the Economic and Social Research Council, the Treasury and the Bank of England. The consortium has proposed that modellers—those whom it supports, such as the London Business School, the national institute and so on—should participate in the sort of exercise that my research assistants and I carried out this summer. That recommendation has come from the panel on which the Economic and Social Research Council, economists, Treasury representatives and the Bank of England are all involved.
The Treasury and Civil Service Committee—I do not see a member in the Chamber, but I am sure that it will take the point—could play a useful role in commissioning the exercise in future years, thus getting people in Parliament, the City and the media used to the idea of how expectations could be formed more rationally.
The Treasury's panel of independent forecasters—I welcome its operation, and it is doing a useful job—is in a more difficult position than the Select Committee. Even by asking the panel to do the exercise, the Treasury and its Ministers would appear to be endorsing the results that would emerge before anyone knew what they looked like. There is a limit to how far the Chancellor and the Treasury can try to lead public and technical opinion.
There is a further difficulty that the Treasury would face in spelling out monetary and exchange rate policy, which is consistent with the fiscal stance that the Budget adopts. An exchange rate policy that would work could require major improvements in supply side performance in manufacturing, for which the Chancellor and Opposition Members hope but for which there is not yet any solid evidence.
The country needs the stark realisation of the necessity of securing that supply side performance improvement. The objective may be achieved by people in industry responding more effectively to the Government's conception of supply side incentives, or it may need Labour's much more active policies on investment, training and research. What I suspect will prove to be the case is that it will need both.
Either way, the Treasury has the clearest evidence, and it should be spelled out. The longer the picture is obscured, the greater will be the delay in addressing the greatest economic challenge we face, which is to restore the competitiveness and capacity of manufacturing, the more difficult will be the task and the greater will be the challenge from overseas. No monetary or exchange rate


policy is likely to ease the fiscal stance: only effective supply-side policies will do that—and then only in the longer term.
Let us consider what the political effect is likely to be of the balance that the Chancellor has chosen in the Budget between the tax increases and expenditure cuts that he has had to make. The Government will certainly face grave problems on the issue of public sector pay and in maintaining an adequate standard of public services in the next three years—that is putting it mildly.
Economic models take a neutral stance in the balance between raising taxes and cutting expenditure and they do not measure the quality of services. As Members of Parliament, however, we are acutely conscious of the importance of those services and of the vital question of their quality.
Ministers evidently believe that the Opposition are stuck with having to choose between losing the election by increasing taxes or by incompetence in the conduct of economic policy. The Government believe that elections are lost by increasing taxes or demonstrating incompetence; that, they believe, is the problem facing the Opposition.
Despite my best efforts to defend the Chancellor's competence today, when the country judges the issues of raising tax or competence in the running of economic policy, it will condemn the Conservative party. That will not change before the next election. I have tried this afternoon to raise the competence stakes. The Chancellor of the Exchequer and the Treasury could do much more.

Mr. David Evennett: I am delighted to be able to participate in the Budget debate. I congratulate my right hon. and learned Friend the Chancellor of the Exchequer on his excellent Budget speech and on presenting a package of measures that will not only find favour across and in all sections of the country but deal with the economic and financial needs of our nation. In addition, the Budget projects us forward out of recession and back into growth and prosperity. It is at the same time an innovative and practical Budget and it should inspire considerable confidence in financiers, industrialists and the man or woman in the street. [Interruption.] I am sorry that the hon. Member for Kingston upon Hull, East (Mr. Prescott) will not even listen to my speech. I listened quietly to his speech and I now want to develop my ideas. I shall come to his speech later.
For my constituents, the most important economic factors are low inflation, economic growth and jobs. The Budget will pass the test on all three fronts. My constituents, of course, also want the Government to reduce their budget deficit and they accept that tax increases and reduced public expenditure are necessary to ensure a sound economy.
The whole community in my constituency, whether they work on the factory floor, in a shop or in an office, share the common aims of increased prosperity, better value for taxpayers' money and stable prices. People on fixed incomes, particularly those on pensions, are extremely keen that there is low inflation and that stable prices are maintained. Those with families are concerned

about their jobs and job prospects. Those in work obviously want a secure future. All sections of the community, therefore, were looking forward to my right hon. and learned Friend's Budget with hope and expectation—hope that it would set the country on the right path for future growth and expectation that it would be fair. They looked also to my right hon. Friend the Chief Secretary to rein in and curtail public expenditure. They have not been disappointed on either front.
I encountered much praise for the Budget and for my right hon. and learned Friend the Chancellor in my constituency yesterday. Considerable praise was expressed for his Budget speech on television because it was in simple language that the general public could understand. That was widely welcomed. His Budget was understood by more people because it was in simple language.
I do not wish to spend too much time on the Opposition because they appear to be quite bankrupt of new ideas about how to deal with our economic problems, but we all know that they would spend more and more money on just about everything. What they never say, of course, is how that would be paid and how the ordinary taxpayer would suffer accordingly.
We know that the Labour party is a party of high taxation. We heard that this afternoon from the hon. Member for Kingston upon Hull, East—have more taxes and use taxation for redistribution. That is what Labour Members are always after.

Mr. Prescott: Oh, yes.

Mr. Evennett: They admit it, and that is why they lose elections.
The Opposition have no time for the wealth creators, the job creators or the entrepreneurs in our society. There is no chance of the Opposition supporting them. They offer no initiatives, no support and no commitment to those who make the real wealth.
Labour is afraid of business—it always has been and business will never trust it. We know that Labour believes in more expenditure, more borrowing and more taxation. We have heard this afternoon about the social chapter, the minimum wage and new union rights. We have heard it all before, but we heard it again today. That is one reason why Labour Members will stay on the Opposition Benches and we will stay on the Government Benches.
In Erith and Crayford, people looked for action in four key areas, to which I shall confine my remarks: first, local businesses; secondly, reform of benefits, particularly the disability living allowance; thirdly, help for pensioners to meet the imposition of VAT on fuel and power; and, fourthly, tax increases that were perceived as fair.

Ms Eagle: I am grateful to the hon. Gentleman for giving way on the point of fair tax increases. Does he agree that under the Conservative Government one third of the huge tax giveaways of the 1980s went to the top 1 per cent. and that the current tax increases are hitting the lower-paid and those who are least able to afford them? Is that his definition of fair?

Mr. Evennett: That is not only not fair but not true. I shall develop my argument on fairness subsequently. In the past 14 years, prosperity across all sections of society has increased. That has been very important.

Ms Glenda Jackson: Will the hon. Gentleman give way on that point?

Mr. Evennett: May I carry on a little? When I reach the part of my speech on fairness, I will give way to the hon. Lady.
In Erith and Crayford, there is a large number of small firms and businesses. In the past few years, they have suffered a two-pronged attack—an increase in bureaucracy and red tape and the worldwide economic recession. They have urged my right hon. and hon. Friends at the Treasury to understand their problems and plight and to take action.
Firms on my industrial estates of Thamesmead, Belvedere, Erith and Crayford, who employ many thousands of my constituents, wanted the Budget to deal with their real needs and issues. I know from conversations that I had yesterday with representatives of some of those firms that they are delighted with the outcome of the Budget. In particular, they welcomed the help for small businesses, with the raising of the VAT threshold, the abolition of compulsory audits for firms with a turnover of less than £90,000 and tax measures directed to help small businesses to get started and raise the necessary capital. Those are good news stories for businesses and small firms in Erith and Crayford.
Together with those measures, the deregulation legislation proposed in the Queen's Speech and the Chancellor's determination to tackle the problems of late payment of bills will go down well with my business men.
Cash flow is vital to smaller firms. Irrespective of how good a product is, if a firm does not get paid promptly on delivery, it can run into serious or perhaps terminal trouble through no fault of its own. Smaller firms therefore welcome my right hon. and learned Friend's comment in his Budget that he would reconsider this issue and try to deal with it for them. This year's Budget has been a Budget for business, a Budget for jobs and a Budget for training.
I welcome the speech that was made by my right hon. Friend the Secretary of State for Employment this afternoon and applaud his new apprenticeship scheme for young people, which is innovative and will be good for young people. I also warmly support his three new initiatives for small firms to encourage training in the engine room of our economy, which is the small business.
The second subject which I wish to mention is the determination of my right hon. Friend the Secretary of State for Social Secuirty to reform the social security system and the urgent need to reform the disability allowance. I know from my constituency casework that the number of people who draw that benefit has increased dramatically in my area. I also know that by no stretch of the imagination are all those claimants severely disabled.
All Conservative Members believe in helping people who are in genuine need. We believe that there should be a benefit to look after those people who are genuinely disabled to ensure that they are supported. However, quite a number of constituents have complained, at my surgery at Erith town hall on a Friday evening, that the present system is unfair and that disability allowance is given to too many people. We all know stories of people who can claim disability allowance who are not genuinely disabled. That was not what was intended when the benefit was introduced.
The new incapacity benefit which will take effect in April 1995—with a new objective medical test, which I believe has been long overdue—will allow the benefit to reach the people who are in genuine need. People who are genuinely disabled will not have a problem because we shall ensure that they obtain the benefit. It is those people

who do not deserve or need it who need to be worried. The new benefit will remove arbitrariness and will be seen to be fair.
The hon. Member for Hampstead and Highgate (Ms Jackson) asked about fairness. Many people in my constituency believe that the disability allowance is unfair.

Ms Glenda Jackson: I am the hon. Member for Hampstead and Highgate; my hon. Friend the Member for Wallasey (Ms Eagle) asked questions regarding fairness. The question that I wished to ask the hon. Gentleman was, if the past 14 years have been so fair, why do a quarter of the poorest people in the European Community live in these islands?

Mr. Evennett: The hon. Lady wanted to intervene on the fairness issue and I said that I would allow her to intervene on the fairness issue later, so she is not correct even about that. I was referring to her, not to the hon. Member for Wallasey (Ms Eagle). It is important that measures are perceived as fair by the majority of people. During the past 14 years, there has been an increase in affluence in all sections of the community.
The third subject which I wish to mention is VAT. In spite of all the pundits, especially those on the Opposition Benches, there was no extension to the VAT fold in the Budget. We all welcome that. Opposition Members have not even been able to acknowledge it.
Pensioners and people in low-income groups were genuinely worried about what would happen when VAT was applied to fuel and power. In early October, I went to the local meeting of the British Pensioners and Trade Unions Action Association. Apart from the usual party political nonsense that one hears at some of those meetings, many people expressed genuine worry about how they would be able to afford the increased fuel bill. I received many letters and had many telephone calls and meetings with other individual pensioners about the problem that they perceived that they would have. Many of those people who had small private pensions did not want to find that they would be excluded from help that would obviously go to those on benefit or very low incomes. They wanted the tax situation to be perceived as fair to them, too.
The fact that my right hon. and learned Friend the Chancellor of the Exchequer has given an across-the-board benefit to all pensioners should reassure individual pensioners and pensioners' organisations that the Government have been fair to all pensioners in the Budget.
Many pensioners in my constituency have told me that, although they welcome the reductions in interest rates for people who have mortgages and for all people who are borrowing money, they have noticed that their own private investment incomes have been reduced accordingly and they have been concerned. They might have another 10 or 20 years to live off their capital and they are concerned about the diminishing return for them. I am sure that they will be delighted with the new pensioners' guaranteed income bond, which they will greet with considerable enthusiasm.
I believe that the extension of the home energy efficiency scheme, which was mentioned in the Budget, and the extension of eligibility to all pensioners and disabled people, will also be welcomed by pensioners' groups.

Mr. Alex Carlile: It is very expensive.

Mr. Evennett: I think that all the measures will be expensive, but they will be perceived as fair to all pensioners, not just those on very low incomes. A large number of pensioners work for many years to enter retirement with a small occupational pension or savings. The pensioners to whom I spoke were naturally concerned about the future. The Budget has helped them and will continue to do so.
I shall now discuss general perceptions of fairness. Whether the Budget is greeted favourably or unfavourably in our area depends on whether people perceive it to be fair to all sections of society and fair in dealing with everyone. I believe that the tax increases that my right hon. and learned Friend the Chancellor has proposed are fair—there is to be no increase in income tax, a limited increase in excise duty on drink, but more substantial increases in the price of tobacco and petrol. Those are welcome measures. I passionately believe in increasing the price of tobacco. I should have liked my right hon. and learned Friend to put more tax on tobacco, because smoking is a health risk. I welcome, however, the tax increase that has taken place this year.
I believe that the benefit reforms will be regarded as fair by the vast majority of people in the country. Business people think that it is a fair Budget and will have great support.
This year's Budget has been a no-nonsense Budget from a no-nonsense Chancellor of the Exchequer. It has been crafted and constructed to deal with the problems that confront the country and to help those in real need. Obviously, tax increases are never popular, but I believe that the vast majority of people will recognise that they are essential at this time and that cuts in public expenditure are also important.
However, the fact that my right hon. and learned Friend the Chancellor has managed to continue to increase expenditure in the vital sectors of health, education and law and order highlights the Government's priorities. Yes, we have to curtail expenditure in certain sectors, but we believe passionately in developing policies in other sectors and we are prepared to spend extra money in those sectors.
I believe that, in time, this year's Budget will be regarded as a great Budget from a great Chancellor of the Exchequer. I also feel that people appreciate his common-sense approach and plain speaking. This year, the people understand what he has to say and they like it.

Mr. Alex Carlile: We have heard some interesting arguments during the debate and before I discuss broader issues I shall mention two. During the course of his contribution, with some of which I agreed, the hon. Member for Bedfordshire, South-West (Mr. Madel) referred to the venture capital trust and, I think, the enterprise investment scheme. Any scheme that encourages investment in industry, especially manufacturing and productive industry, is to be welcomed. I have read the detail, such as it is, that has been supplied so far about those schemes. I would urge on the Treasury the view that any such scheme is unlikely to succeed if it does not include front-loading of tax relief.
The business expansion scheme has been much condemned because of the way in which it was used to attract money into property-related investment. Some of that investment must have been beneficial for the building

industry, which desperately needs help, and I make the specific point that the scheme attracted investment because those who invested could obtain tax relief as they put their money in. I urge the Government not to abandon that principle and to confirm that front-loaded tax relief will remain available, especially in the venture capital trusts, which should give a boost to the rather ailing venture capital industry in this country.
My second specific point is about something that the hon. Member for Erith and Crayford (Mr. Evennett) said concerning pensioners and their savings. He gave a broad welcome to the pensioners guaranteed income bond. I have read the press release describing what detail there is about the bond so far, which was issued by National Savings as the Chancellor sat down having delivered his Budget speech. I hope that the Government can avoid the accusation that seems justifiable thus far—that the bond is something of a confidence trick by the Chancellor.
We have been told that the bond will be introduced after the new year and, according to National Savings, its interest rates will reflect the market at the time of its introduction. We know that the Chancellor is likely to reduce interest rates between now and the new year, so it looks as if the bond will be introduced at an historically low interest rate. The Economic Secretary to the Treasury should tell us when he replies to the debate whether the bond will be linked in some way so that its interest rate rises if and when general interest rates rise. He shakes his head. That will be a great disappointment to pensioners all over the country, many of whom have small savings—£10,000 or £20,000, perhaps—which make a considerable difference to their standard of living. They have seen the return on their investments drop dramatically, and they too suspect, as we all do, that interest rates will rise.
Unless something is done to secure pensioners against losing because of future increases in interest rates, the bonds will prove unattractive, and financial advisers will rightly urge caution before investments are made in them. I ask the Economic Secretary to reflect on the effect of introducing the bond at an historically low interest rate.
The Chancellor delivered the Budget with his usual—and, to many hon. Members, enviable—self-confidence, but as a piece of economic thinking it was breathtaking, not so much because of what it told us but because of what it did not tell us. Like many right hon. and hon. Members, I have been examining the Red Book to see where the money will come from to fill the gap of £3 billion to £4 billion that was unexplained in the Budget speech. That is easily discovered on page 117 of the Red Book: it comes from the contingency reserves. The table on that page shows that the reserves are to contribute £3·5 billion in 1994-95, £7 billion in 1995-96 and £10·5 billion in 1996-97. The Chancellor did not tell us in his speech the effect that using the contingency reserves to that breathtaking extent will have on the economy and its future growth. It is about time that we were given an explanation, and I hope that we shall hear it later.
I shall now deal with employment policy, and unemployed people's view of the Budget. Five groups of people will have listened to the Chancellor's speech with bated breath. The first group is the young people who hope to be employed in future, and the second is people who are already on the employment market but who are unemployed. Then there are those who have worked but are now long-term unemployed, and those who have worked and want to work again but who are sick and


therefore unemployed. The fifth group consists of those who are in work but who, because their jobs are so badly paid, are very poor and need help: they are entitled to help from the Government because they are doing exactly what the Government urge, and are working even though their wages are very low.
All those groups will have looked for the prescription that the Government gave them in the Budget to deal with the ills that they experience. But some found the milk of human kindness prescribed only in the special form dispensed by the Secretary of State for Social Security. He is the dalek of the unemployed, uttering the word, "exterminate"—meaning, exterminate people from the statistics. One of the results of the Budget will be that for about the 29th time since 1979—I may be one out; it may be only the 28th time—the Government will be able to massage the unemployment statistics because of changes in policy. In the months to come we can expect a possible reduction of 200,000 in the official number of people unemployed, but that will not be a genuine reduction. I shall return later to the Secretary of State for Social Security and his plan for the sick and unemployed.
The first category of people whom I mentioned—young people who hope to be employed—cannot have greeted the Budget with anything other than the deepest gloom and depression. All over the country we have a vast stock of brilliant and able young people who can learn skills, technology and knowledge, who have the capacity to soak up the skills needed to enable the economy to grow—many Members of Parliament can no longer do that, because we have passed that absorbent age for learning.
Yet what prospect do those young people face? Those who come from affluent homes will be all right, because their mums and dads will see them through university, will give them the money to live on and will probably encourage them to take out student loans because they represent a cheap form of credit, but will pay off the loans on their children's behalf. Those young people will come out at the end of their higher education with a reasonable prospect of employment, because they will not be worried, at least at the beginning of their graduate life, about taking jobs with relatively low pay, if the prospects are good.
Then there are the others—those who come from poorer homes whose parents will not be able to help them out, except at the cost of extreme sacrifice in some cases. If they go to university, they will be saddled with loans that now represent about one third of the cost of being at university. When they come out, they will face what is effectively a form of substantial additional taxation—the repayment of the loan.
Let me give an example. The Government seem to think that £14,000 a year is a sufficient salary from which to start paying back the loan. I hope that many young people who come out of university will feel that school teaching is an attractive profession. In the early years of teaching they may earn little more than £14,000 a year. Are they really to be regarded as sufficiently affluent to start paying the price of their loans immediately at the beginning of their working lives?
Salaries of people starting work in another category, in manufacturing industry, do not on the whole compare with the salaries paid by firms in the City. Are able young people to be driven out of manufacturing industry because they feel that they will be able to repay their student loan more successfully if they work for a firm of accountants or become lawyers? That does not seem to be a way to

potentiate young people and to enable the country's economy to grow. It is a depressing picture that will drive many even into the choice of not going to university.
There is also the question whether people can get jobs when they graduate. I know of many examples of young graduates who have no chance of jobs related to the skills that they have acquired. I was told by a constituent a few weeks ago of his son and daughter-in-law. The son is a brilliant first class honours graduate in a scientific subject and the daughter-in-law is a brilliant first class honours in history. Both had been promised research funding, which was removed before they could begin research; so they set about looking for work and obtained jobs selling hamburgers in the constituency of the hon. Member for City of Chester (Mr. Brandreth), who is in his place. There is nothing wrong with selling hamburgers; it is an honourable occupation. Regrettably, there are rather more hamburger outlets in Chester than there used to be when I lived there as a young man and the fine, old shops were in greater abundance. People should not have to sell hamburgers if they have been trained in biotechnology or in microcomputer electronics or other subjects that are needed to enable the country to develop and grow.
The Secretary of State for Social Security has produced a test for those who are sick and unemployed that is more like a parlour game than a medical test. The consultation paper that was produced yesterday on the medical assessment for incapacity benefit contains items such as the following—a severity score of 17 points for those who cannot carry out simple mental arithmetic—that means that there will have to be a reshuffle in the Treasury. There will be 23·5 severity points awarded to those who are frequently muddled or confused—that will virtually wipe out the Government. There will be 4·5 severity points for those who cannot lift and push an unladen wheelbarrow—one of the tests that will be used to contradict the opinions of doctors as to whether people are able to work. Will doctors be expected to have an unladen wheelbarrow in their consulting rooms? With respect to those who sit in your Chair, Mr. Deputy Speaker, one test that may be especially apposite is the 11 severity points for regularly losing track of conversations.
That is the regime that the Government are seeking to impose to decide whether people are fit for work. Until now, doctors—perhaps some do need to be more careful, for there is always room to remind the professions to apply high standards—have been respected for being able to decide whether people are fit for work. By those absurd tests, the Secretary of State for Social Security is to introduce a standard whereby civil servants rather than doctors will decide whether people are fit for work. Yet again the Government are set on conflict with the medical profession.
What about the poor and employed? The wages councils have been abolished. The Government have pulled from under the poor and employed those very structures that at least fought for them, and on a statutory basis, to ensure that there was some kind of fairness even in poorly paid employment. There is nothing in the Budget that encourages people to take the jobs that the noble Lady Thatcher used to urge upon them; and that the present Secretary of State for Social Security, and others who have been given illegitimate titles at various times by the Prime Minister, encourage them to take to justify the feeling that they are doing something worthwhile in obtaining poorly paid employment. Why should people work as packers,


assemblers or even hill farmers, who are no longer able to earn a decent income, if the Government cannot provide a minimum level of support to ensure a decent standard of living?
Even housing has been attacked in the Budget. In Wales, where there is a desperate shortage of housing to rent in rural areas, Tai Cymru—Housing for Wales—is being given less money to build. What on earth can be the justification for that?
In the Budget, we wanted to hear a strategy, not for the Conservative party or to call off the wreckers on the Tory Back Benches, but for the country for the years to come. If we had seen a real strategy for employment, our happiness would have been far greater than our regret at a Government success which might have deprived us of the opportunity of further by-election and election successes. The Liberal Democrats thought that the Government might have learned the lessons of their by-election defeats and the marvellous victories of my hon. Friends the Members for Newbury (Mr. Rendel) and for Christchurch (Mrs. Maddock). We would have willingly said to the Government "Well done" if they had produced a strategy that would have enabled unemployed and poor people to look to the future with greater confidence. Regrettably, they did not do so. In due course, the Chancellor will be judged on results and not on rhetoric.

Mr. Roy Thomason: I join others on the Conservative Benches in congratulating the Chancellor on his excellent Budget. I shall not repeat the words of praise that have emanated from others, but entirely support them.
The Chancellor was seeking to achieve twin targets of low inflation and growth. I listened with interest to the comments of the hon. Member for Kingston upon Hull, East (Mr. Prescott). As I understand his argument, he wanted to reduce unemployment but did not take too kindly to growth, and he did not accept that the Budget would lead to growth. I do not understand how he expects unemployment to be reduced other than by virtue of growth in the economy.
I listened to the hon. Gentleman attack the rising share prices in the City. He seemed to think that the confidence of City investors in Britain and from abroad showed that there was something wrong with the economy, instead of being, as it is, a declaration of support.
I also listened to the hon. and learned Member for Montgomery (Mr. Carlile) who followed the traditional course of Liberal Democrat spokesmen by being a manic depressive. That party gets incredibly excited for short periods, then goes into a deep decline. Today was a time of such decline. We heard doom and gloom, we were told that interest rates would rise substantially thus depriving people of the advantage of the new investments that they could make.
We were also told that the Government should not eat into contingency reserves. The whole point of having contingency reserves is to have money available to support public services at a time of high inflation, when it is necessary for Government to divert resources because of emergencies. When we have stability in the economy, there is no need for such high reserves.
If the hon. and learned Member for Montgomery had thought about the targets of the Budget and about the success on which it was building, he would have appreciated that my right hon. and learned Friend the Chancellor was correct to reduce the contingency reserve. But doom and gloom will not allow that.
The hon. and learned Member complained about reductions in house building. He should have told the House that the Government have pledged that the Housing Corporation will build 20,000 more houses than planned. As a result of lower prices, we are creating more house building; that is what he should have told us. But that is not good enough for hon. Members on the doom and gloom Benches.
I congratulate my right hon. Friend the Secretary of State for the Environment on his allocation of local government funds today, pursuant to the announcement in the Budget. He has said that there is to be more money available for local government. Although, clearly, there will be some pressure on general levels of council tax, my right hon. Friend has acknowledged in the distribution of grant the needs of particular areas, especially those with growth problems and on the urban fringes, of which my own authority is one.
I am delighted that Bromsgrove will be allowed to spend about £1 million more than it did last year, and that it will receive that same amount in extra grant, so that the council tax in my constituency can remain broadly the same, if the local authority chooses to spend at its new increased standard spending assessment level. That is welcome, and it is an acknowledgment of the needs of individuals and areas which is typical of this Government.
There have been complaints from local government that the level of increase is inadequate. Those who criticise fail to appreciate that 70 per cent. of local government expenditure is based on wages and salaries. It is for local government, as it has done on occasions in the past, to ensure that it gets maximum value for money and that it limits pay rises to a level which can be afforded by the nation as a whole. I see no reason why local government should not contain its wage expenses.
I pay tribute to the work of much of local government in delivering value for money; that drive must continue. We must look for extensions in competitive tendering and for more productivity in local government. Today's Audit Commission report points to fraud running at £25 million a year in local government. That is clearly one area in which action must be taken, and I hope that local government will note the Audit Commission's comments in seeking to deal with the problem.
I now turn to business investment. I welcome the help that my right hon. and learned Friend the Chancellor has given industry by creating a low-tax economy and by giving assistance to the self-employed in VAT limits——

Mr. Prescott: A low-tax economy?

Mr. Thomason: That comment comes ill from an hon. Member in a party that has consistently committed itself to increasing the level of taxation for business and for individuals.

Ms Eagle: Will the hon. Gentleman admit that his Government's Budget figures demonstrate that taxation collected this year, as a proportion of gross domestic product, is 34·5 per cent., and that it will go up by 1998, on the Government's own figures, to 38·5 per cent.? When


the Labour Government left office, the figure was 34·25 per cent. The Tory Government are a Government of high taxation, and their claims of low taxation have been exposed for the scam they are.

Mr. Thomason: I take note of the fact that, under the terms announced by my right hon. and learned Friend, the proportion of public expenditure will be reduced from 45 per cent. to 41·5 per cent. We shall have less government and not more government. The Labour party consistently argues for more and more and more public expenditure, and for more taxation.
There is a need to increase productivity, and much has been achieved to date by British industry. Management has been transformed in the past 14 years; much was done in the Thatcher years. We now have industry that is competitive. We have a work force who identify with the objectives of the employer in ensuring common success, not just for the shareholder and the manager, but for the whole work force. That transformation has been achieved on the back of a series of legislative proposals, and will be continued in the spirit of the Budget.
We also see delivered in the Budget an opportunity to improve the skills of the work force. There is new training for apprenticeships, and there is education investment. Better standards will be attained so that the new generation will be fit for the workplace. However, in the international league, Britain's productivity levels still lag behind those of some countries.
We need high growth and high investment. The two go together, which the hon. Member for Kingston upon Hull, East has difficulty in understanding. He complained about being likened to prehistoric animals. When I heard some of his comments, I understood the relevance of that criticism. High growth and high investment, running together. lead to improvements in productivity. We need to ensure that there are adequate margins to allow for investment. The call I hear again and again from British industry is that it wants to invest more so that it can then achieve a level of productivity second to none.
We have a problem with short-termism, as even Opposition Members may agree. I hope that future Chancellors will have the opportunity to address that problem as the economy moves forward. We need to ensure that pension funds do not look just for immediate, short-term gains. We want the banks to be more flexible. We want less constraint on venture funds. Against that, we need to ensure that London maintains its position as a leading international financial centre, and we should not do anything that interferes overtly with that.
Short-termism leads to the search for a quick return rather than to long-term planning, and there is not sufficient incentive for plant investment. We sometimes invest in the wrong sort of business asset—in land rather than in plant. A pressure that is especially important for smaller businesses is the need for high capital repayment on loans which can hinder their cash flow.
I welcome the steps that the Chancellor has taken to deal with some of those problems, but I hope that he will go further in the years ahead. I hope that he will look critically at opportunities, when he can afford them, for capital allowances to be given. I hope that he will consider whether it would be appropriate for United Kingdom pension funds to bear tax on short-term gains. I wonder

whether he will consider the liquidity requirements of banks, which might encourage them to look at equity investments and longer-term loans.
Above all, what is needed for a long-term investment strategy for British industry is stability. The Budget is an important step in producing that stability that industry requires. Entrepreneurs need encouragement. Family businesses want equity partners. Business starters require long-term help and industry must have new plant to boost productivity. We are on the road to economic success, and we need to ensure that we achieve it through long-term investment.

Ms Angela Eagle: I listened carefully to the speech of the hon. Member for Bromsgrove (Mr. Thomason). He must be one of the few people to have visited Eurodisney, as he seems to have spent all his life in fantasyland. I do not recognise the society that he described.
I noted the lack of response on the prickly issue of tax rises when I questioned him on the overall tax burden. It is an untypical occasion in that it is our first ever unified Budget. Unfortunately, it is leading to a depressingly familiar mixture of wrongheaded ideological economic bigotry from the Government, and cynicism that is so glaring that only the British Conservative party seems to be capable of it.
The Budget is also revealing because Budgets are a time for choice. They reveal the Conservative philosophy behind what they do, their views on society, for which we shall soon call them to account in the run-up to the next election. The Budget is cynical because of the utter betrayal of all the Conservative party's election promises, none more so than on taxes. That is what this Budget represents.
We must go back to the Budget before the last general election in 1992 and see how the Conservative party then presented the economic state of the nation. First, there was a tax-cutting Budget. When we look at the Red Book from that time, we find that the deplorable state of the economy was either conveniently not noticed or wilfully covered up. I shall leave it to individuals to decide who caused the mistakes.
The £50 billion deficit on the PSBR, with which we are so concerned at this time, was absent from the figures and was much lower than those in the Red Book at that time. It was only after the general election that the small and conveniently underestimated deficit on the PSBR suddenly ballooned to £50 billion and became the centrepiece of the strategy for the two subsequent Budgets that we have had this year in the aftermath of the general election. We have a Chancellor who boasts about cutting the PSBR figure placed before the electorate in the Red Book by no less than £8 billion. That is £8 billion fewer for public services, schools, hospitals, investment in our crumbling infrastructure, welfare protection, transport, and so on. In the Budget, 3 per cent. of GDP was taken out of the economy. By any stretch of the imagination, that is a massively deflationary package.
The Howe Budget in 1981, which caused such a catastrophic depression, was openly described as a deflationary Budget for taking a mere £1·8 billion of expenditure out of the economy. Taken with its


predecessor in March, there is no description for the Budget other than massively deflationary, and we must be worried about that.
The two Budgets must be taken together. Only then can one see the colossal switch in Government expenditure and values facing us now. It is a huge pincer movement. There has been a £23 billion overall increase in taxation. Who would have believed that from looking at the Conservative party election manifesto?
As I tried to explain to the hon. Member for Bromsgrove, the GDP share taken in taxes, based on the Government's figures, is forecast to go up from its present 34·25 per cent. to 38·5 per cent. by 1998. I must point out once more for the record that, in 1979, when the last Labour Government left office, the share of GDP taken in taxes—the overall tax level in the economy—was 34·75 per cent.
Income taxes are to be raised, albeit surreptitiously, by £5·2 billion, through the freezing of allowances, changes to the married couple's allowance and changes in national insurance contributions, all of which are the opposite of the pledges that were given during 1992 and will add the equivalent of 3p to basic income tax rates.
The Conservative Government do not raise income tax rates directly—they do not have the guts or the courage to do that. They raise them surreptitiously and try to claim that tax rises are not going on. But the facts are there. When people look at the deductions from their pay packets from next April, and as the tax increases begin to bite in the following years, they will understand, more than the Government believe, precisely what is involved in the Budget package.
It has been estimated that we have also taken back with the massive rises in taxes almost all the tax giveaways that were such a feature of Conservative Governments in the 1980s. But they have not been taken back from the people who received them in the first place. As I pointed out, almost a third of the money given away in tax increases in the 1980s—some £9 billion—went to the top 1 per cent., while only £4·5 billion went to the bottom 50 per cent.
That is why in the past 14 years of Conservative government there has been a reversal in income distribution, so that the difference between rich and poor, and the number of people who are now poor, is back to the level it was when General Booth first invented policy statistics and began to measure them in 1886. That is a deplorable record of which the Government should be ashamed.
As well as massive tax rises, we are seeing swingeing cuts in the welfare state. That is another way in which the Chancellor is trying to balance the books, which are so unbalanced by the Government's economic mismanagement. We have heard much in the debate about changes in the benefit system and the way that it will affect some of the worst-off people. That very much reflects the values of the Conservative Government: do not take back the massive tax giveaways that were given to those who are already rich, but instead tax those on invalidity benefit, and introduce VAT on fuel so that some of the poorest people in society can be taxed to pay for the economic mismanagement; but whatever one does, do not tax those who can afford to pay it.
We have heard announced in the Budget a vicious three-year squeeze on the public sector, which involves public sector pay and provision. I seriously doubt whether those spending targets can be kept. If they are kept, as a result of decisions taken in the Budget we shall have a public sector that is increasingly dilapidated and unable to replace essential goods, services and infrastructures.
We must also remember that the public sector has been grossly neglected over the past 14 years. It is already in a weakened state. The fairness of introducing a public sector pay freeze and expecting it to last for three years, on top of the annual freeze on the 1·5 per cent. increase for those who work in the public sector, beggars belief. It will be extremely difficult for the Government to make their pay policy stick.

Mr. Clifton-Brown: The hon. Lady argues that the Budget is deflationary. Therefore, I can only assume that she wishes to increase public expenditure. If that is the case, which of the many taxes aired by the Labour party would she increase?

Ms Eagle: I shall come to the deficit shortly and explain what I believe should be the principles for dealing with it. I hope that the hon. Gentleman will wait until I get to that part of my speech.
None of the massive increases in taxes and vicious cuts in public spending was mentioned in the Conservative party manifesto. The manifesto claimed that the Conservative party was the party of low taxation; a claim that has been exposed for the cynical farce that it is. The Conservative party boasted about increasing public expenditure, yet as soon as the Conservatives have their greedy hands on the reins of power, they do the opposite.
The Prime Minister's promises—they have been much quoted in the House, so I will not repeat them—have been exposed for the cynical sham that they are. Soothing pre-election noises about the welfare state have been replaced with fundamentalist new brutalism, which was rampant at the Tory party conference. It is fairly clear from looking at the position of the Conservative party at the moment that the right of the party is on the rampage, and it is led by those in the Cabinet whom the Prime Minister one accused of being of doubtful parentage. They are beginning to get their way. The lunatics have taken over the asylum and they are in the driving seat. The Prime Minister is either with them and agrees with them, or he is too weak to stop them. In the next few months, we shall be able to judge which of those conjectures is true.
There is nothing new about the Conservatives' ability to play fast and loose with their election pledges. At the last general election, there was a famous and effective Conservative party smear about Labour's so-called tax plans. Hon. Members will remember all those posters saying things like "Labour's tax bombshell" on all those free poster sites given by the tobacco advertisers so that the Tories could put their propaganda around the country. The Conservatives claimed that, under Labour, a car worker earning £12,000 a year would be £359 a year worse off and an electrician earning £30,500 would be £563 worse off. As a result of the Budget, by 1996, a car worker will be £520 worse off and an electrician £570 worse off. I hope that the electorate will bear those illustrative figures in mind when they next consider which way to vote at a general election. The electorate will never trust the Conservative party again.


The willingness to deceive the electorate is nothing new for the Tories. The Prime Minister and his Cabinet colleagues are just following a discredited tradition that has existed for a long time in the Tory party. Recently, I was shuffling through a book shop when I came across a book entitled "My Style of Government: The Thatcher Years" by Nicholas Ridley. It was the late Lord Ridley's memoirs, which I got for £2·99 off a discount rack, presumably because the market was working. I want to quote a couple of his pearls of wisdom. First, writing about the run-up to the 1979 election, he said:
They"—
the British electorate—
were not invited to switch to a Government with clearly spelt out superior alternative policies. Margaret Thatcher was careful not to articulate them too clearly in public for two very good reasons. First, she was not at all assured of her colleagues' support for what she wanted to do. Second, it is never wise for an opposition leader to expose his or her detailed policies to the possibility of ruthless dismemberment by the Government.
Later, he said:
Thus, the full nature of Thatcherism was not known to the electorate in 1979. Nor was it fully understood within the Parliamentary Party.
The Prime Minister has carried on that tradition and taken it further. Rather than hiding what he aims to do, he has said that he will do the opposite. That is progress in the Conservative party.
There is general agreement that the £50 billion deficit in the PSBR must be tackled, but there is no Government analysis of where the deficit came from. It is almost as if it just descended from above and landed on the Government and they now have to think of a way to deal with it. In reality, it is here because of the failure of their farcically named economic miracle. It is descended directly from the failures of their 14 years in power.
There is also £100 billion worth of North sea oil revenue to be taken into consideration. They have given it away in tax cuts for their rich friends, leaving British industry unmodernised and in a weakened state. The OECD recently said that two thirds of the public sector borrowing requirement is cyclical—it is unemployment related. The figures show that £27 billion of the deficit goes on paying to keep people on the unemployment registers, where they are unproductive.
Typically for the Conservative Government, they have decided that if close to half their deficit is a result of unemployment, they should cut benefits. They attack the victims and the symptoms but never the causes. Given the structure of the deficit, a job strategy should have been at the heart of the Budget. Noticeably absent from this Budget, as it was from the March Budget, is any such strategy. Most of us would welcome the sprinkling of supply-side policies, but they are irrelevant given the size of the problem.
We have to cut the £27 billion cost of keeping people on the dole, not by cutting unemployment benefits but by creating jobs and getting people back to work. The fatal flaw in the job seeker's allowance—it is a revealing name for the benefit, which causes cynical, hollow laughs among unemployed people—is that it blames the victims of unemployment for their situation. It does nothing about demand in the economy and it almost blames people for being on the dole.
On average, 22 people chase every vacancy. When the Secretary of State for Employment went into the job market after leaving university, there was a job for every person looking for one. The situation has since deteriorated

markedly. Nobody would disagree with supply-side measures that make it easier for people to look for jobs, but behind the unwritten strategy is the assumption that jobs are there for them to take. Twenty-two people chasing every vacancy shows that the jobs are not there. Therefore, we must do something to stimulate demand.
The Budget is predicated on several dubious assumptions. The first is that the rather modest growth rates that the Budget predicts will be unaffected by its deflationary aspects. After the Howe Budget, which was less deflationary than this, growth plummeted. This time, there is no credit boom to fuel economic recovery, as there is a mountain of debt caused by the deregulation of the financial institutions that the Government introduced in the
early 1980s.
Secondly, the Budget assumes that world trade will recover rapidly and grow, and possibly also that there will be a deal on the general agreement on tariffs and trade. Both those assumptions are dubious and not a predictable enough basis for an entire Budget strategy.
Thirdly, the Budget assumes that the public sector squeeze will stick, but there will be real troubles with that, and rightly so.
The Budget punishes victims and makes the wrong choices. It has the wrong economic and political philosophies behind it. We shall condemn it and vote against it for those reasons.

Mr. David Lidington: I listened with care to the hon. Member for Wallasey (Ms Eagle). She thought that the public sector deficit was far too high, but she did not want to put up taxes or cut public expenditure. She glided gently over public borrowing. Whatever his critics would say about the late Lord Ridley, they would never accuse him of intellectual incoherence, and the hon. Lady and her hon. Friends might do well to learn the lesson of intellectual coherence from the life and politics of Lord Ridley, rather than taking up one or two of his tactical hints, which they seem to have done successfully over the past few weeks.
I wanted to begin my speech on a non-partisan note. One of the fruitful disciplines of having a unified Budget is that it provides an institutional discipline for Whitehall Departments to think carefully about priorities within the context of the Government's overall programme and to consider how the policies of each Department relate one to another. The example that I had in mind was transport.
I was pleased that at the margins of the announcements of my right hon. and learned Friend the Chancellor was the decision to ring-fence money so that the crossrail project could proceed on its next stage. As my right hon. Friends know, I hope that that means that the Government are backing the project whole-heartedly and I look forward to the next stage and its eventual completion.
My right hon. and learned Friend the Chancellor announced measures that will affect transport policy. I welcome the decision to make it easier for the private sector to become involved in the planning and financing of infrastructure projects. That may have the beneficial side effect of making it more transparent to judge the cost and benefit of road schemes compared with rail schemes, which traditionally have been calculated using different analyses.


I also welcome my right hon. and learned Friend's decisions on petrol duty and an experimental road-pricing scheme. Those decisions raise difficult questions. My hon. Friend the Member for Bedfordshire, South-West (Mr. Madel) said that A roads or minor local roads might be swamped with traffic if a motorway toll charge were so high as to force traffic off that motorway. The road-pricing and petrol duty measures will reduce congestion and pollution, but they would have the inevitable effect of biting hardest on poorer drivers, the ones most likely to be forced off the road.
The Budget provides us with a very welcome opportunity to develop a transport policy that is in line with the Government's environmental objectives. I was glad that my right hon. and learned Friend, in announcing his measures for the financing of transport and taxes on transport, referred to the United Kingdom's international obligations to reduce emissions. I hope that the debate that has been initiated by the Budget statement will be fruitfully taken further, both in the House and in the country at large.
I am aware from the controversy over the proposed A418 in my constituency of the difficulty that policy makers inevitably face in reconciling the competing demands of economic growth, the need for good communications, including good road communications, and the need to maintain a civilised environment in towns and cities and in the countryside, the beauties of which people can continue to enjoy.

Mr. Peter Ainsworth: Given that we accept a degree of hypothecation in the road tolling proposals, does my hon. Friend agree that it would be helpful if the money raised by road tolls was not ploughed straight back into the motorway system but applied to transport infrastructure projects generally—with, of course, the assistance of the private sector?

Mr. Lidington: My hon. Friend has made a characteristically constructive proposal which I hope our right hon. Friends will take seriously.
I was interested in the fact that my hon. Friend the Member for Surrey, East (Mr. Ainsworth) raised the question of hypothecation, because my right hon. and learned Friend the Chancellor also referred to it in his announcement. Another unintended consequence of a unified Budget, from the Treasury's point of view, is that Ministers collectively will be bound in future to consider the Government's priorities, not only on spending but on what is the best means of raising the revenue with which to finance those expenditure priorities. I know that to speak in such a way is to challenge one of the most hallowed doctrines of Treasury theology, but I confess to being a fully paid-up member of the heretics and blasphemers tendency when it comes to that belief. I have already referred to the tension that inevitably exists between the priority to be given to economic growth and environmental needs.
Hon. Members have rightly spoken about the problem of unemployment. I welcome the Chancellor's Budget and agree with the plaudits given to my right hon. and learned Friend by Conservative Members by the business community and by observers in the media. When people look back on the Budget of autumn 1993, they will judge

its effectiveness in terms of how far it was seen to promote the chances of more British men and women moving into productive employment in the medium term.
In my constituency, unemployment is still way below the national average—for which my constituents and I are grateful—but it is still high by Aylesbury's historic experience. Although I welcome the fact that unemployment has fallen in recent months, it is still too high and needs to be further reduced.
I welcome the initiatives in the Budget to foster and develop businesses, particularly small businesses. If every small family business could be enabled to take on one additional employee, that would make an enormous dent in the national unemployment level. My right hon. and learned Friend's announcement about late payments and statutory audit requirements will be warmly greeted by business men and women in my constituency.
The tax changes to encourage investment and reinvestment in family enterprises are also welcome, particularly the tax concessions for investment in the proposed business link schemes announced by my right hon. Friend the President of the Board of Trade.
One lesson which we have learnt as a country during the past few years is that it is all well and good to encourage businesses to start up—it is healthy that we should do so—but a number of people go into business without equipping and training themselves for the difficulties and challenges that that will bring. The business link scheme promoted by the Department of Trade and Industry is an important way in which the Government will be able to focus support and advice on small businesses during the crucial early years and months of their development.
I hope that the Department of Trade and Industry will soon give approval to Thames Valley Enterprise's bid to set up business link offices in Aylesbury and in two other towns in the Thames Valley area.
I welcome the measures that have been announced to improve the quality of the British work force and the priority to be given in the Government's public spending plans to education and training and to the apprenticeship scheme announced by my right hon. Friend the Secretary of State for Employment. As that scheme develops, he will be able to draw on the good practices of the many Government, voluntary and business initiatives up and down the country, including the scheme run by the Aylesbury industrial training group, which is an active client of Thames Valley Enterprise.
Despite the predictable criticism from the Opposition, there is everything to applaud about the principle of the job seeker's agreement. It is surely common sense that when an unemployed person presents himself or herself at a jobcentre, he or she should not only sign on and obtain a list of potential job vacancies or employers to approach but discuss a plan, tailored to individual experience and expectations, which he or she will be able to follow in his or her search for work.
There are measures that can be taken to improve the effectiveness of the job seeker's agreement and to ensure that, when it is introduced, it will be positively welcomed by unemployed people. It is important to ensure that Employment Service staff are adequately trained in developing such agreements with their clients. I know that my right hon. Friend the Secretary of State, like every other Minister, has a finite kitty from which to draw, but I urge


him to look again at the time that we allow to elapse before such measures as job clubs are available to those who are unemployed.
Constituents of mine who have been unemployed for a long period tell me that they were at their most enthusiastic, determined and creative about finding new work in the weeks and months immediately after they were made redundant. By the time unemployed people qualify for extra help of the kind that we have understandably targeted on the long-term unemployed, much of that initial drive, commitment and self-confidence has dissipated. I hope that my right hon. Friend the Minister will consider whether there are ways of giving people some of that assistance at an earlier stage in their unemployment.
Finally, I want to refer to the international scene. Despite what Opposition Members have said, the fact that the United Kingdom expects 2 per cent. growth at a time when our main continental markets are stuck deep in recession is something of which the Government and, more particularly, British industry, should be very proud. We should be looking not merely for a cyclical upturn in our main European markets but to long-term competitiveness in British industry and in industry throughout the European Community. We are talking about competing not just with Germany, America and France but with the fast-developing economies of the far east and, behind them, south Asia and Latin America.
Too often, the rise of the far east tiger economies is seen simply as a challenge to our way of life. That challenge certainly exists and increases the need for a flexible labour market and for an economy in Britain and Europe that fosters innovation and efficiency. The rise of Asian prosperity also presents a tremendous opportunity because it means that hundreds of millions of people in the world are now beginning to have the opportunity, for the first time ever, to buy consumer goods and services that people in western Europe have generally taken for granted for many years. It would be an act of madness for the European Community to connive at policies of protection that would cut us off from those millions of customers precisely at a time when we should be able to sell them the goods and services that we produce.
My right hon. Friend the Prime Minister referred in a celebrated recent article to some of the current preoccupations of the European Community as having all the quaintness and degree of efficacy of a tribal rain dance. The image that comes to my mind when I look at some of the goings-on in Brussels is one drawn from Galsworthy. It is of a group of elderly Forsyte aunts with a rather complacent view of past success and present wealth punctuated by the occasional querulous and disapproving comment about all those uncouth, self-made men in the new neighbourhood down the road who are rather getting ideas above their station. That is too often the reaction of EC civil servants and political leaders in some of our partners countries to the challenge and opportunity in the far east.
The Budget will be of great benefit to Britain's recovery from recession. Clearly, too, the continued prosperity of the British people does not rest alone on the Budget and the measures that will follow it. It rests perhaps above all else on the success of my right hon. Friends in fighting a battle of economic ideas both in the United Kingdom, against the forces of reaction on the Opposition Benches, and on a European scale—a battle for deregulation, for free markets and for free trade. I wish them well and I wish them every

success in that task, for the prosperity of our nation and of the entire European continent depends crucially on their success.

Ms Glenda Jackson: It is with some pleasure that I follow the hon. Member for Aylesbury (Mr. Lidington)—not because of the logical cohesion of his speech, but because of his disingenuousness in asking the Secretary of State for Employment to ensure that job seekers will welcome an agreement chat will be imposed upon them, knowing that, if they refuse to sign it, they will not have their benefit reduced by six months but will receive no benefit at all.
As a Member who represents a London constituency, I awaited this year's Budget with some anticipation, not least—despite initial difficulties in obtaining a copy—because of the consultation document produced by the Secretary of State for the Environment earlier this month, entitled "London, Making the Best Better". I had read with interest how the Government would deal with crime in our capital, raise standards in education, improve housing and the transport system and, in the words of the Secretary of State,
ensure a fair and open society for people of all backgrounds.
It was therefore with some regret that I noted the difference between that document and the words uttered by the Chancellor of the Exchequer.
In my constituency—unlike that of the hon. Member for Aylesbury—unemployment is at heights that have never before been recorded. In some parts of London, unemployment is above not only the national but the European average, with 22, 26 and, in some parts of London, as many as 37 job seekers pursuing the same job.
Earlier this afternoon, the Secretary of State for Employment stated that the whole purpose behind the job seeker's agreement was to ensure that the job seeker pursued a job with all possible effort. As we are now a full member of the European Community, that presumably means that British job seekers will be expected to seek jobs on the continent of Europe. I wish that I had had the opportunity to ask the Secretary of State whether the financial provision that would make that possible will be furnished even though unemployment benefit is to be reduced.
Getting to the continent—indeed, getting around our capital city and these islands—is becoming increasingly difficult if one depends on public transport. The Chancellor pledged that British Rail and London Transport investment would be maintained at levels substantially higher than in the 1980s.
I am sure that no hon. Member will need to be reminded of which Government were responsible for the scandalously low levels of investment to which the Chancellor referred; nor that investment in our rail network is lower than it was in the 1970s, the 1960s or the 1950s; nor of the response of London Underground to the Chancellor's announcement about their forthcoming levels of investment. London Underground stated:
There is not a limitless seam of self improvements to be mined and only so much can be achieved with an aged system, where many assets are way beyond their design life.
Compare that with the words of the Secretary of State's glossy brochure:
London is developing to meet the challenges of the next century. Next year, Parisians will be able to get to London in around three hours using the Channel Tunnel.


What fantasy world is it that the Secretary of State is thinking of in which chic Parisians are whisked to and around a modern vibrant London on a modern state-of-the-art transport system?
Suppose that Parisians wished to visit London—and, following the kind and welcoming words that the Secretary of State for Social Security uttered at his party conference, what foreign national would not wish to visit this sceptred isle—what sight would greet them? Air that one can chew on, doorways that double as bedrooms and a transport system parts of which were designed not for the 21st century but in the 19th century.
Were Ministers out of the country last Thursday and Friday? Did not they witness or were not they told of the chaos which was caused when a fault in a 70-year-old cable—a cable laid before most of the Government were even born—shorted out and plunged half the underground system of our capital city into chaos and darkness?
Following that incident, I contacted officials of the Northern line, which serves my constituency. The officials informed me that that line has cables of a similar age and condition across their network. The officials added that, earlier in the previous month, a train had derailed near Balham, when more than 1,000 yd of track disintegrated. They added that, due to a lack of resources, the modernisation of a line that first opened in the 1890s would have to be shelved.
Today, the British Tourist Authority stated in the Evening Standard that investment in the Northern line—because of its link with the new Waterloo terminus—was vital for tourism in the capital. What has been the response of the Government to those derailments, power failures and continously shelved projects? The response has been to underfund London's transport budget in 1994-95 by £400 million.
How on earth can that be regarded as making the best better? Sixty per cent. of the signalling on Network SouthEast must be replaced within the next 10 years, and 2,000 miles of track must be renewed to avoid increased journey times. Over one quarter of the network's 6,000 coaches need to be replaced by 2002.
What was the Chancellor's response to those requirements? He cut investment in the rail industry by £247 million. Yesterday, the Chancellor was referred to in a number of media broadcasts as "the magician". That is clearly because he has completed the feat of sawing in half Britain's railway investment. Unfortunately, this feat is no illusion, and the pieces do not come back together again.
We heard a great deal yesterday about the burden that the nation is shouldering as a result of the public sector borrowing requirement. The Chancellor said that his overriding task was to place public finances on a sound footing. We heard nothing about the costs to the economy and to the Exchequer of allowing our transport system to decline to rack and ruin.
Perhaps, when the Minister winds up, he will outline how much revenue the City of London loses every year as a result of traffic congestion. Perhaps he would like to outline how much it would cost London Underground if all those who were trapped during last week's failure claimed compensation under the citizens charter.
Perhaps the Minister could estimate the attractiveness of the Central line to a foreign investor who is weighing up

whether to sight his business in this country or in another European capital. Perhaps he could explain the environmental benefits of a road-building programme which will cost the taxpayer more than total expenditure on the railway industry, London Transport and the Civil Aviation Authority.
On Tuesday, the Chancellor claimed that any critic of the Government's car tax who claimed also to support the international agreement to curb carbon dioxide emissions would be sailing dangerously near to hypocrisy. I would respectfully suggest that any Chancellor who claims to support both public transport and the environment, and who then embarks on a £2 billion road programme, has sailed so far beyond hypocrisy as to be now watching it vanish below the horizon.
The brochure "Making the best better" is littered with the phrase, "What is going on?" Probably that is the only phrase that is applicable both to that document and to the Budget. What indeed is going on in relation to the Government's transport strategy and their policy, such as it is, towards unemployment? I think that hon. Members and the people of this country have a right to be told.

Mr. Geoffrey Clifton-Brown: I am grateful to you, Mr. Deputy Speaker. I know that other hon. Members want to speak, so I will attempt to be brief. It is good to follow the erudite speech of the hon. Member for Hampstead and Highgate (Ms Jackson), but I suspect that in my remarks we shall part company.
Any prudent Chancellor should set himself realistic objectives, and then expect to be judged by them. The present Chancellor set three key objectives—sustainable recovery, a climate for jobs and for growth, and low inflation. He said that the Budget would achive those, and would ensure sound public finances to secure a lasting recovery and rising living standards.
The Chancellor is to be congratulated on delivering a Budget that is capable of delivering all of those objectives. The previous Chancellor, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), left two important legacies. The first was the unified Budget, which combined spending and tax raising, and the second was the separation of revenue and capital expenditure. The first of those is important, because it has ensured that economic management is now more efficient.
My right hon. Friend the Chief Secretary to the Treasury is to be greatly congratulated on holding public expenditure at the level he has simply by tightening the use of the contingency reserve, which is normally available as a surplus to Departments at the end of each year. The second is important because for far too long this country has spent too much of its wealth on consumption and not enough on capital projects.
In that connection, I warmly welcome the maintenance of the capital programme at £22 billion over the next three years. Unlike the Labour party, our Chancellor decides what is prudent to spend and then decides how to raise the funds. Labour does exactly the opposite. It thinks what it might like to spend, and then decides which taxes to raise to pay for that.
I warmly welcome the fact that the PSBR will shrink as a proportion of GDP from 7·5 per cent. this year to almost zero by the end of the century. That will be a remarkable


turnaround in the economy, which, when it is achieved, will take us to a situation similar to that which pertained in 1989–90. That can only be achieved by the fiscal responsibility shown by the Chancellor in the Budget and by holding public expenditure at a tight level.
To the dismay of the Labour party, and contrary to all the speculation before the Budget, we have not increased or widened the scope of VAT, with the small exception of putting VAT on insurance premiums. At the same time, there is a generous package of measures to help those who are less fortunate than ourselves—the sick, disabled and unemployed. I did not notice the Opposition giving one cheer of welcome for any of the measures. I have not noticed one shred of welcome for the fact that the Government have managed to fully uprate all benefits for inflation.
I was particularly pleased that the Chancellor announced a package of granny bonds, for which I have called for some time. I have constituents who have worked hard in fairly lowly jobs all their lives and who have saved a small amount which puts them above every benefit. They will take up these bonds with alacrity.
My constituents will also welcome the environmental fiscal measures which the Chancellor introduced in the Budget. The doubling of the home energy efficiency scheme is particularly welcome. The hon. Member for Greenwich (Mr. Raynsford) is present. He and I, along with other hon. Members, have taken part in an energy efficiency inquiry by the Environment Select Committee. Our report said that, if we do not improve our housing stock, and particularly the energy efficiency of the stock, it will be like pouring carbon through a sieve. We must continue to ensure that our housing stock is more energy-efficient.
The human element in this is more important. The fuel bills of people on low incomes will be cut, so they will have much more of their income from benefits, or wherever else they get their income, to spend on other things.
I wished to concentrate my remarks on the measures for small and medium businesses. There are 1 million more small businesses today than in 1979. They have been the main contributor to the 1·3 million extra jobs to which the Secretary of State for Employment referred. Those businesses will continue to be the engine for growth in the economy.
I warmly welcome the package of measures for small businesses. I particularly welcome the fiscal measures—the raising of the VAT thresholds, the exemption of small firms from corporation tax, enterprise investment schemes, venture capital trusts and the new apprenticeship scheme which was announced this afternoon by the Secretary of State.
Businesses will be helped by the involvement of the private sector in large-scale public infrastructure projects. My constituents will particularly welcome the upgrading of the west coast main line, in which many firms in my constituency will hope to participate.
Even more than the fiscal measures, I welcome the deregulation measures for small businesses. In that respect, my right hon. and learned Friend announced four major measures. First, he said that he will look carefully at harmonising the tax and national insurance arrangements for employers. I would go further than that, and have a Government agent as a link man between all Departments and businesses.
When the VAT man came to inspect my books the other day, I told him of that idea, but he said that I could not expect a VAT man to be an expert on income tax, employment law and everything else. To which I replied that I was expected to be an expert on VAT as well as many other things. The costs to businesses could be cut by such an arrangement.
Secondly, I warmly welcome the limited audit requirements. As my right hon. and learned Friend has already announced, they mean that, with turnover between £90,000 and £300,000, companies will require an independent accountant's report, and below £90,000 none at all.
I have just one caveat which I hope my hon. Friend the Economic Secretary will bear in mind this evening—that creditors could be at risk. When the measure is introduced, I hope that those businesses will be required to add a caveat on their invoices, letterheads and quotations so that all their creditors and customers know precisely with what type of businesses they are dealing.
Thirdly, and most importantly, I warmly welcome the proposals on the late payment of debts. That will be difficult to achieve, but if a workable solution can be found, it will enormously improve the cash flow of many small and medium-sized businesses.
Fourthly and finally on these deregulation measures, I welcome the self-declaration and assessment measures for paying income tax. I particularly ask my right hon. and learned Friend to study other models in the world. I fear that there is a danger of the new system becoming even more complicated than the present system. In particular, I ask him to look at the American model, which is relatively simple and which I believe collects most of the tax due, which is surely the test that the measure will have to pass.
My right hon. and learned Friend has delivered a Budget to restore public finances and enterprise, which drove this economy during the 1980s to such success, and that against a background of low inflation, low interest rates and low unit wage costs. No wonder the markets have reacted so well during the past few days.
Under this Government, the economy will go from strength to strength as it is the only growth economy predicted this year and next year in Europe.

Mr. Alan Simpson: I was particularly fortunate in having been given a sneak preview of the Chancellor's Budget speech about a week before it was delivered. I happened to be on a tour of a pools company at the time and we had reached the point where it kept its records of the major cock-ups in the industry.
I was shown a picture of a spot-the-ball competition which was run in a regional newspaper where, inadvertently, the ball had not been deleted. Fortunately, some eagle-eyed person on the paper had spotted that and alerted the company. Right next to the advertisement was a huge disclaimer telling the readership and the punters that the promoters had made that cock-up, that they were terribly sorry, that they would not be running the competition that week and that they hoped that people would understand.
In the following week's edition of the paper there was a story pointing out that, despite the disclaimer, 10,000


coupons had been returned—all missing the ball. I realised that I was being given a preview of the Chancellor's Budget statement, one week later.
The Chancellor was presented with a picture on which the ball was firmly planted. Not only that, but in large letters across the ball was written the word "jobs". In case the Chancellor missed that, one could see, hanging on the lips of the crowd behind the word "jobs". But he faced a dilemma because his party had already submitted its coupon and the crosses were all clustered on another part of the picture, so what was he to do? The Chancellor knew that those crosses would be the crosses that were cast in the future leadership election of the Conservative party. But the ball was somewhere else. It did not matter that his party was as disconnected from the game as they are from the real world outside; he had another agenda. So, like the magician that he is reputed to be, he put another ball in. He put it in the middle of the crosses that mattered, the crosses that belong on the Conservative Benches, and ignored the crosses that his Budget statement will impose on the backs of the British people.
I wondered, if the Chancellor had had the vision or the courage to see where the ball was, what he would have said. What would he have said if he had really been prepared to deliver a Budget statement that addressed the issue of jobs?
Well, today he would probably have insisted that we began the proceedings not with a debate which outlined how local authorities would face cuts and capping, but he would have been telling those local authorities, "Look, we are in a mess. I want you to go out and build and improve houses. I want you to go out and take the jobless off the dole so that we can take the homeless off the streets. That's what this country needs you to do. That's what I need you to do. We are going to build our way out of the recovery." That is what a Chancellor who was committed to jobs would have said.
The Chancellor would then have told engineers and designers in manufacturing, "Do us a favour, will you? Build us some buses. I am fed up with these milk floats rattling round our cities, congesting the roads where we used to have decent integrated public transport systems, with buses that we used to build ourselves. We are a Government who are in the business of buying buses and we want a manufacturing industry in Britain that is in the business of building them." The Chancellor would then have gone to the mills and said, "We need some steel. We need rolling stock for the railways. We need rail investment to match that in France, Germany and Japan. That is what the future of a manufacturing base of a Britain fit for the 21st century must be built on."
The Chancellor would have gone to the pensioners and said, not on a token basis but on a comprehensive basis, "We will come up with a plan to insulate your homes. It must be energy efficiency for all or none at all. We need such energy efficiency work because it is labour intensive. We can take people off the dole and give them skills and jobs as well as saving pensioners' lives. And while we are at it, you can forget about VAT on domestic fuel: it was a cock-up of our own, so let us ignore it if we can—least said, soonest mended."
The Chancellor would have gone to parents around the country and said, "You were absolutely right to demand a

nursery place for every child that wants one, because they found in America that juvenile crime was best deterred in those areas where they invested in pre-school nursery care and education for all children. That is what we know we need to be doing here". The Chancellor would have said, "I can guarantee a Budget that will put books in the classrooms, in schools with roofs that do not leak any more".
As for the national health service, the Chancellor would have said, "We shall not be conducting this argument between the trusts or local hospitals and the district health authority, where they are left making decisions about shoving patients in critical states of health into the back of ambulances and sending them careering round local roads trying to find a bed that has a nurse to go with it. We shall be providing you with additional funding for the nursing staff that is needed to run our intensive care units properly within a properly staffed and resourced NHS."
If the Chancellor had wanted to be an environmentalist and an internationalist, he would have gone to the miners and said, "Look, we are really worried in Britain. Only a month ago the Government of the Ukraine reversed a decision to close down the remaining three parts of the Chernobyl reactor. Why? Not because they thought that it had suddenly become safe, but because they knew that they could not survive the winter without energy from those reactors. They know that they face a major environmental catastrophe. We know that they face a major environmental catastrophe." Three or four more Chernobyls would come across national boundaries and show no respect for Governments who have said, "It's nothing to do with us." The Government should be saying to the miners, "For God's sake lads, get down the mines and dig them some coal." We can afford to give them the coal. We need to give it to them because the choices in relation to environmental catastrophe are also our choices. The Government should also say to the miners, "While you're digging that coal, if there's any left over, pass it out among the pensioners until we get round to insulating their houses."
We did not get any of that in the Budget—instead, it took money out of the economy. Clearly, that will be deflationary and the problems of deflation will be borne by those who have least. It is a Budget under which the majority of people will pay for the recuperation of the rich. The period of unemployment benefit is to be halved, with no jobs at the end of it. The sick are to be taxed because they happen to be sick. Those with home insurance are to be taxed because they happen to have been burgled. Car owners will be taxed because they happen to have had their cars stolen. A Government who purport to be tough on crime will say "Tough" to an electorate who claim that the taxes are manifestly unfair. There is to be no strengthening of the position of the victims of household or car crime. Instead, they are to be punished for being the victims of the very crimes about which the Government wax lyrical when they talk of being tough and cracking down on crime.
The Chancellor tried to pretend a sense of evenhandedness in the freezing of tax allowances, as though that was somehow neutral and there was no inflation in the economy. Life goes on and, unfortunately, such hidden taxes also go on. The idea of standing still and being neutral is absurd. It is a little like presuming that if we stood still on the deck of the Titanic we would all be fine. Sooner rather than later, someone would say to the person


next to them, "It's still going down." That is precisely what is happening in the British economy—it is still going down.
This part of the Budget amounts to little more than a series of windfall taxes for the Treasury. It would have been better if the Chancellor had said that. He will soon find himself the recipient of the deferred taxes that were provided for last year. They will soon start to roll into his coffers. The stand-still taxes will magically appear and fall in his lap. It is not magical, it is not divine and it is not an act of God; it is the act of a Chancellor who is not being honest about where and how he is raising his taxes. If nothing else, the right hon. and learned Gentleman has come close to resorting to the notion of immaculate taxation as a way of raising money.
I want to be sure that the House is clear about the proposed public spending cuts. There is no fat left on the bone of local government spending. There will be service cuts, which will mean job cuts which will result in rising unemployment and further calls on the Exchequer to pay for that. Goods will be in the shops but there will be no money in people's pockets to purchase them. Even by Tory standards, this threatens to be the shortest so-called recovery on record.
In response to criticism, many Conservative Members have asked, "What would Labour do?" It is not for me to offer a Labour manifesto, but I want to offer some ideas that this House and the Labour party should consider. We should not be apologetic about mentioning them. First, we should thank the Chancellor for the unified statement. It helps us to move forward and to deal with the areas on which we propose to spend money while identifying the areas from which to raise that money. It is not just about clearing deficits; it is about what we could do constructively with the wealth that the Government raise and use on behalf of the people.
However, we must point out that the Government have been forced into that position because after 14 years of their being in power the country is in deep economic trouble. The main conclusion to be reached is that reliance on the free market has been a catastrophe. Inasmuch as it is about putting Britain back to work, it has not worked at all. The Labour party should not collude with the myth; it should not endorse it as a notion worth considering. Instead, it should point in a quite different direction.
Labour should say quite simply that as a party it is unashamedly committed to progressive taxation. We should ask people to contribute on the basis that the more that they earn, the more they are able to pay. We should ask least from those who are least able to contribute. The progressive tax hand-outs to the wealthiest in society during the 1980s should be first among the targets of an incoming Labour Government. That source of revenue could be better deployed than being given to those at the top end of the income scale who have taken the money and done a runner.
We should begin with the notion of a 50:50 tax. All those earning more than £50,000 a year should be asked to pay at least a 50 per cent. rate of tax. That would raise about £4 billion a year. We should also think about what to do with empty properties. The Government like to say that they forced local councils to use empty properties, but we never hear any mention of the empty offices that litter our cities. Their owners get away with writing off money that should be going to the public purse. They should pay 100 per cent. of the unified business rate in the first year.

In the second, that would be multiplied by itself. In the third year, it would be multiplied to the power of three. There should be a premium on putting the office space in our cities into productive use. Those who are happy to sit on those empty properties and leave them unused while people are scratching around to find premises from which to operate businesses are acting against the public interest.
Whenever the Government are in difficulty, they do not tackle the problem—they simply move the goalposts. A future Labour Government should study how the public sector borrowing requirement is defined. Rather than using local authorities as regulators of the economy, it is time that Britain embraced a different relationship between central and local government—something that is far better understood on the continent. Local government should have a degree of autonomy. Its borrowing should be based on its capital assets, with the requirement only that it balances its revenue accounts. It should function as a municipal enterprise. We should separate local and central Government borrowing and take those figures out of the PSBR.
We should also recognise the commitments of our party conference and commit this country to a level of defence spending equivalent to the European average. That would mean a PSBR recycling of £8 billion. Germany, despite its reunification problems, is still the strongest economy within the European Community. Its defence spending is 1·9 per cent. of its gross domestic product. If this country recycled its defence spending in the way that Germany has done, that would release funds equivalent to the entirety of manufacturing investment in the United Kingdom. A sum of £13 billion would be freed for productive investment in our manufacturing base. If Germany can do that from a position of strength, why cannot this country do it from the position of weakness?
I thought that the Chancellor's tax on flights was a novel idea. Bill and Betty on their way to Benidorm will pay an extra fiver, or about 3 per cent. of the cost of their return flight. I thought that the idea had something to commend it. If flights by passengers can be taxed, why not also tax the flight of capital? I asked the Library how much a 3 per cent. tax on that would produce. I was told that it would produce a massive sum, so I scaled down my original figure.
No less than £40,000 billion of speculative capital moves through the London foreign exchange market each year. If a tax of one eighth of 1 per cent. were levied on that amount, it would bring the Chancellor revenue of £50 billion. Even a Conservative Government would be hard-pressed to lose all that in one year. Why spoil the summer holidays of ordinary people but be terrified of spoiling the speculative holidays of the City of London?
An incoming Labour Government would need to know that the biggest threat facing planned recovery is the permanently deregulated financial markets—markets which have the power to undermine any serious, sensible investment programme aimed at delivering economic recovery based on full employment. An incoming Labour Government would need to examine the ways in which capital has restructured itself on a European scale over the past 15 years, and to understand why a Conservative Government no longer needs to rely on finance from manufacturing. Their source of revenue and political support is international capital, which does not give two hoots about jobs in this country.


The Secretary of State mentioned the concept of jobless growth. At best, that is what faces us now. So long as we rely on the financial markets in the City to determine the pace and direction of economic policy, there will be no jobs in any growth package that emerges from this Chamber.
When the dust settles on this Budget, the British public will realise that the poor will be poorer, the homeless will still be homeless and this country will still be importing goods and exporting jobs. Far from having a Chancellor who is a magician, a one-in-a-million person and a visionary, we have a Chancellor who merely is one of the 10,000—a Chancellor who could not see the ball when it stared him in the face.

Mr. Peter Ainsworth: The hon. Member for Nottingham, South (Mr. Simpson) made a number of points that I would have mentioned, had I more time. The hon. Member for Kingston upon Hull, East (Mr. Prescott) was referred to earlier as neanderthal man. He seemed to take pride in that and was right to do so. By comparison with the hon. Gentleman, neanderthal man was advanced. The hon. Member for Nottingham, South, if not neanderthal man, was certainly homo erectus.
The failure of Oppposition Members to present any constructive ideas is the most distinguishing feature of the debate. We are used to them opposing Government policy, but they owe it to themselves and to their supporters to present a constructive view of their economic policies. We all have the message that they do not like the Budget—that is abundantly plain—but neither we nor the country know what are the Opposition's economic policies and how they would tackle the nation's deficit.
We heard many complaints from Opposition Members about the deficit, but have they ever asked themselves how it was created? It is the result of Government spending in areas that matter deeply to millions of people, including substantially increased health spending and increased expenditure in real terms on education in recent years. The Opposition must come clean: would they rather that money had not been spent? If they wanted that money spent, how can they oppose the Budget? That poses the Opposition with a real problem, and that is why we have not been given their answer.
I hope that in a moment we shall hear some constructive points from the Opposition, but the truth is that in their reaction to the Budget they have.shown that they are bankrupt of any ideas for dealing with the deficit.
My right hon. and learned Friend the Chancellor has approached the problem in a balanced and sensible way. If there is a deficit, it is because the Government are spending too much money and therefore it is right that the burden of the Budget should fall on that Government spending. That is appropriate. It is also necessary to raise takes in order to create a balance and to sustain increased spending on important things such as health, education, and so on. I am sure that Opposition Members would agree with that. So why are we suddenly seeing the most massive volte face of modern political times with Opposition Members failing to approve the Chancellor's tax plans?
I shall continue to live in hope that some Labour or Liberal Democrat Member will propose a positive plan for

dealing with the economic situation in this country. They owe it to us, their supporters and to the country at large to do that. Conservative Members are the only politicians who have answers to the problems that Britain faces today, and the country understands that fact more and more as time goes by.

Mr. Frank Dobson: I am glad that the Chancellor of the Exchequer is present. The Budget, as with every Tory Budget, was greeted with glee by Tory Back Benchers. It always reminds me of Walpole's statement that today they may be ringing the bells, but tomorrow they will be wringing their hands.
This Budget, as with every preceding Tory Budget, unravels day by day and week by week. It is becoming increasingly clear that this Budget will force people to pay more and receive less in return. It certainly breaks yet more Tory election promises. Nowhere is that more true than in London. From April this year, London's 1 million pensioners will have to pay VAT on fuel and the Chancellor's compensation will not make up for that—50p is not enough. The cuts in funds for housing associations will mean that fewer houses are built in London so that more families will be left homeless or, almost as bad, left living with their in-laws. The cuts in Government funding for local councils announced today will mean that services will be reduced and council tax bills will rise. Many of London's 500,000 people who are out of work will face having their unemployment benefit stopped after six months having paid in for years on the understanding that they would be covered for a year. That is a case of the Government doing a Maxwell.
Children in London's schools face losing teachers, books, equipment and school dinners as a result of the Government's reduced funding for London's desperate schools. The rents of tenants of councils and housing associations will be forced up. Londoners will pay more insurance tax than people in other parts of the country because the premiums for household insurance are so much higher in London.
Those are all examples of people having to pay more and receiving less. It would appear that short changing the public is becoming official Tory policy.
London Underground is becoming a sick joke. Every day passengers experience delays and disruption. Every day they climb emergency stairs because lifts and escalators are not working. Every day somewhere on the underground system the signalling goes on the blink and millions of gallons of water seep into the tunnels. Deep down, tube travellers fear that one day that water will gush in rather than seep in. Last week a cable failed and closed down a substantial part of the system. Parts of the cable were said to be 70 years old. The younger parts, if that is they way to describe a cable, had been there for at least half a century. The average London Transport train is 24 years old. A quarter of the signalling equipment was installed 40 years ago; and, if people want to put that into perspective, 40 years ago England had never lost to a foreign team at Wembley.
The whole system is falling apart. Many passengers get a poor service. Staff are sick to death of taking the blame for all the inadequacies. With maintenance problems rising, fewer staff are being employed on vital maintenance work.


Things are going from bad to worse, but what do we get in the Chancellor of the Exchequer's Budget statement? The Sir Humphreys worked on it carefully. It was worded thus:
London Transport's investment programmes will be maintained at levels substantially higher than in the 1980s."—[Official Report, 30 November 1993; Vol. 233 c. 25.]
My only response to that is, "I should hope so," but that is a cut in what was most recently promised. It is also a cut in what was promised in the Conservative party election manifesto, which said that £3,500 million would be invested in the Underground over the next three years. The Chancellor has broken that promise.
The most recent promise was to make £964 million available for investment in the tube system. The new figure is down to £900 million, but the real position is worse than that. Most of the money we have heard about will go on new projects. The money that is left to be invested in the existing system—the one that passengers have to use, which is falling apart—has been cut from about £525 million to £325 million. That represents a cut of £200 million, or 38 per cent.
I emphasise that that is a cut in spending on the shambolic system that is in existence. Every pound that is removed from that total results in more misery on the misery line, more breakdowns, more delays and more people stuck in tunnels and labouring up emergency stairs. That is what tube travellers face, even if it is not experienced by Ministers going round in their chauffeur-driven cars.
It may have been the fear that their chauffeur-driven cars might be delayed that caused even this Government to defer their proposal to deregulate London's buses. Bitter experience in other cities apparently revealed to them that bus deregulation could result in gridlock from Hackney to Hounslow, and would be unpopular with voters. Instead of fully abandoning that crackpot scheme, however, the Government say that they have just postponed it. Instead, they are to force London Transport to sell off its bus operations.
Until now, London Buses has had to compete with private would-be franchisers for franchises on various routes, but apparently it has been too successful. In open competiton, it has been winning too many franchises for the routes. That public sector competitor is to be closed and forced to sell its assets. When that happens, assets are always sold off at knock-down prices. I remind the Chancellor that takings for the Treasury from privatisation have been roughly half the book value of the assets of each nationalised industry.
It is worth reminding the Government, who say that they are promoting tourism, that today the British Tourist Authority has expressed concern about the possible disappearance of the red bus from London. It says that
it is a symbol of London, which is recognised all over the world and an immensely valuable promotional tool.
Presumably, in future, brochures sent out by the authority to get people from around the world to come to London will contain photographs of buses of many colours instead of the red bus. Have the Chancellor and the Secretary of State for Transport considered the impact on tourism and tourism promotion of getting rid of the red London bus?
One thing does not come at a knock-down price—the cost of travelling, not only in London but throughout the country. From January, passengers on London Underground, London Buses and Network SouthEast face

average fare increases of 6 per cent.—three times the rate of inflation. That is another example of people having to pay more in but getting less back. The same increases will apply to many other railway passengers.
Will those other passengers get a better service? It seems unlikely. On some lines there has been a deliberate deterioration in the service following the introduction of the passengers charter. The journey times in some timetables have been lengthened so that a train that takes one hour 20 minutes for a journey is arriving on time; under the previous timetable, if it took one hour 20 minutes on that route, it would have meant that it was arriving 10 minutes late. It now meets the charter's requirement, so apparently everything is well.
Somewhere in the Budget figures, the Government will have hidden away the cost to the taxpayer of rail privatisation. They have managed to hide it until now. but it will come out eventually, and it will be money from the taxpayer and passenger, not a penny of which will be spent on improving services. Instead, it will be diverted into the pockets of merchant bankers and motley crews of City consultants.
As my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, this is yet another Budget for the City. People in the City have been the principal beneficiaries of the Government's privatisation programme, and they have also done rather well out of our usually abortive efforts to involve private sector finance in railway projects.
All those projects have several things in common. They are announced with a fanfare of trumpets, and then they are re-announced time and again, by press conference, press briefings or official leaks. That is intended to achieve the impression that something is happening, and that Tory Ministers are skilled in negotiations. It would be hard to get further from the truth.
The Chancellor of the Exchequer and the Secretary of State for Transport were at it again yesterday and the: day before, about the west coast main line. When the Tories came to power, that line, which links London to the major industrial and commercial centres in the west midlands, the north-west and the west of Scotland, was the most modern electrified railway in Britain. Today it is a national disgrace. It needs to be upgraded, but nothing has been
done.
In his Budget speech, the Chancellor said:
the Government are today giving the go ahead to three substantial new transport projects…the refurbishment of the west coast main line…linking some of the biggest cities in the country—London, Birmingham, Manchester, Liverpool and Glasgow."—[Official Report, 30 November 1993; Vol. 233, c. 930.]
He carefully did not mention that not a penny piece of public money is going into the scheme, or that the improvements might well be confined to the line south of Crewe, or that nothing has been decided, no commitments have been entered into and no contracts have been let.
The Secretary of State for Transport announced yesterday that Railtrack would be "inviting expressions of interest" and that, in late 1994, a competition would be held to select a private sector outfit to modernise the west coast main line, but from Euston to Crewe only. Even if it all goes ahead, therefore, it will be another two years before the work starts on the ground. It will probably be the 21st century before any passengers see any improvements, and the Transport Minister warned yesterday that it will lead to higher fares.


All that was announced, with the usual fanfare of trumpets, as good news for the passengers, the railway supply industry and the taxpayer. There was the usual talk of its having top priority, competition's doing the work and a great commitment to driving it forward. Everyone who uses the line hopes that the project will succeed, but all this circus has happened before, and people will believe it when they see it.
It really has happened before. Five years ago, in late 1988, the Government and British Rail announced what they called
first steps towards private sector investment in the Channel Tunnel rail link".
They were "inviting expressions of interest" and they proposed to hold a competition, so that someone from the private sector would build the line.
A year later, the then Transport Secretary, Cecil Parkinson, said that a preferred partner had been chosen—Eurorail, made up of Trafalgar House and BICC. It still needed the Government's final agreement, but Mr. Parkinson said that he was
encouraged by the clear indications that the link could be financed commercially and brought into operation by 1998.
As everyone knows, that scheme fell through. Nothing has been done, and the completion of the channel tunnel link will be delayed to the year 2003.
When, two weeks ago, the Secretary of State announced that he was having another go at getting private investment in the channel tunnel link, we were back to expressions of interest and the idea that the Government might hold a competition.
Five years ago, when Cecil Parkinson made that prediction, the development of the channel tunnel scheme was at exactly the same stage as that of the west coast main line yesterday. Five years later, not a damn thing has been done. To say the least, the Government's track record is poor. They may make that approach work this time, but they may not.
The people, the industry and the commerce that depend on the west coast main line deserve better than that. That line is a major economic artery, and its future should not be decided by a private sector lottery. Strategic decisions are matters for Government. The work is needed and it must be done. How it is financed is secondary—just as the finance for the improvements in the east coast main line was secondary.
Why should people who rely on the west coast line not get the same treatment as those who rely on the east coast line? Clearly a commitment is needed from the Government; the absence of their unswerving commitment adds the sort of uncertainty that private investors are desperate to avoid.
Then there is the crossrail project for London. That is announced and reannounced with such regularity that it is rumoured that some Transport Ministers now believe that it has been built. But it has not, despite all the Budget promises to the contrary. The project is falling behind, not getting ahead.
Next there is—hallelujah—the Jubilee line extension, which has been on and off for years. Its construction apparently depended on whether the property speculators at Canary Wharf came up with the £400 million that they had promised. That may have sounded generous of them, but we must bear in mind the fact that their speculative

development at Canary Wharf had already received more than £350 million in subsidies from the pocket of the taxpayer.
In the end, after long negotiations, the Government announced that the developers could manage to come up with a contribution of £300 million. However, that was not as good as it looked, because Ministers had not allowed for inflation. I am a simple soul, and I asked whether inflation had been allowed for.
I found out that the figure of £300 million that the Government had trumpeted—the Chancellor ought to pay attention to this, because it could affect his calculations—is to be paid over a 20-year period, starting on the day that the Jubilee line extension comes into operation, whenever that may be.
Its value will not be uprated for inflation, so if inflation averages 4 per cent.—the top of the Government's target range—over that 20-year period, the real value of the private sector contribution will have halved, to £150 million. If inflation averages what it has averaged over the past 20 years—9·7 per cent.—the private sector contribution will be worth about £70 million.
If that inflation rate of 9·7 per cent. were to prevail for 20 years and, because of stupid negotiations by the Government, the money were to be paid in the final year of the 20-year period, the private sector contribution would be worth precisely £20 million of the £400 million originally promised. With that sort of track record, one would not want the Secretary of State for Transport even to sell one's used car.
That is not the end of the story. One of the principal merits of the Jubilee line extension, in all the cost benefit analyses—[Interruption.] The Chancellor of the Exchequer says that I am being ridiculous. Apparently he believes that it is right for the taxpayer to have to pay for the project at current values when the money is invested, but does not believe that the private sector should have to match that. In that case, he is not fit to be Chancellor of the Exchequer.

Mr. Kenneth Clarke: The Jubilee line extension is, of course, the first major investment in the tube since the Victoria line was built some years ago. We shall invest more than £1 billion in the core London Transport underground over the next three years, and another £1 billion-plus in the Jubilee line.
That is about half as much again as we used to invest in the 1980s, and about seven or eight times as much as used to be spent by that ridiculous body, the Greater London council, which allowed the Underground to decay, and presided over the old wiring, the overmanning and the declining service. Supported by the hon. Member for Holborn and St. Pancras (Mr. Dobson), the GLC preferred to spend its money on buying votes by keeping down bus fares. That was Labour's contribution to transport infrastructure in London.

Mr. Dobson: The Chancellor of the Exchequer in his present role ought to know that the Greater London council asked to invest more money, but was prevented from doing so by the Ministry of Transport and the Treasury. Indeed, the Chancellor may have been one of the Ministers who refused to give the GLC the permission.
One of the principal merits of the extension of the Jubilee line was to be a station at north Greenwich that would have allowed people from south-east London the


access to the tube system that they are presently denied. Although the north Greenwich station was listed in the Secretary of State's press release, as one would imagine, and featured on the map published with the press release, there was no commitment to build the station. The line will go through north Greenwich, but the station will not be built because it is dependent on raising some other private sector money and the Government have not quite got round to it yet.
There was another attempted con about transport in London in the Budget. The Chancellor said:
the Government are today giving the go ahead to … the extension of the docklands light railway to Lewisham".—[Official Report, 30 November 1993; Vol. 233, c. 930.]
That was partly true, but not the whole truth, because it is not the scheme that was originally announced. It is minus two important stations, which were left out for the most compelling of Tory reasons—they cannot get private sector help to build them. That brings the cost down, but reduces the usefulness of the line.
Rail schemes are not the only example of the incompetence of the Department of Transport. Its biggest spending programme is the roads programme and thus where its greatest incompetence is to be found.
The recent National Audit Office report shows that money from the roads programme that was spent on motorway widening has been squandered. Since 1989, the cost of motorway widening schemes has shot up by 46 per cent., and the National Audit Office estimates that it is likely to increase by over 78 per cent. by the time that the schemes are completed. Of the 18 schemes completed so far, 10 were investigated in detail by the National Audit Office and, on average, those 10 had cost double the original estimated cost. That is a disgrace.
We welcome the belated decision to reduce spending on the road programme, but call for some changes in its priorities. There is an opportunity for Ministers to be both right and popular—a novelty on both counts at the moment—but they are still insisting that roads schemes go ahead all over the country in the face of desperate opposition from local people, and are not going ahead with some schemes that are vital for economic development, the safety of passengers and would be clearly welcomed by local people.
Those vital schemes include converting the Al north of the Tyne into a dual carriageway and ending the constant deaths that occur there, and to make the final few miles of the road to Dover docks into a dual carriageway. That would be welcomed by virtually everybody concerned, it would be good for the economy of both places and it would be popular. I hope that the Ministers will not use the Budget reduction as an excuse for further delays in those vital road-building schemes.
The Secretary of State for Transport announced today that he will be researching electronic road pricing for motorways. He has been seeing too many re-runs of "Doctor Who". That proposal has nothing to do with transport: it is just another Tory tax racket. I would not be surprised if they came up with a system that exempted Rolls-Royce drivers from having to pay. After all, the Chancellor's new airport tax exempts executive jets, as I am sure he will confirm.
If the Chancellor's little friend introduces motorway tolls on the road network, it is worth noting the list of the advantages of coming to Britain that was issued today by the British Tourist Authority. Item four of the 15 strengths

is the high-quality, toll-free road network. That proposal will not do a lot of good. Did the Department of Transport or the Treasury consult the tourist industry or anyone before they went ahead with these propositions?
There is another aspect which the Chancellor did not mention in his Budget statement. He has raised tax on bus transport. Operators will have to pay the insurance tax, which will be passed on to the passengers. It does not stop there. The Chancellor put 3p a litre on road fuel duties and said that the duties would rise by 5 per cent. each year. What he did not mention—I cannot imagine why—was that the fuel duty rebate to local bus operators is not to be uprated, this year or any other year.
Perhaps he did not consult the Bus and Coach Council on the likely effect of this scam. The council has been in touch with me to say that its members are up in arms. The operators will pay more and more duty. They say that that will hit disabled and elderly passengers, because work to install wheelchair lifts and low floors will become more expensive relative to takings. Services in rural areas will suffer, orders for new vehicles are likely to be put back or cancelled, and fares will rise. It is like putting 2 or 3 per cent. VAT on public transport by the back door. It is entirely typical of the way in which this Government behave.
There is another transport aspect to the insurance tax. It is believed that about 1 million people do not insure their cars. A tax will be added to premiums that people do not want to pay in the first place. I freely acknowledge that such people are law breakers, but I know that we try to discourage and not to encourage law breaking. There is a danger that the imposition of that tax——

Mr. David Hunt: This is feeble stuff.

Mr. Dobson: The Secretary of State says that this is feeble stuff. If he thinks that it is feeble to say that we are in danger of increasing rather than decreasing the number of people driving uninsured vehicles around Britain's roads, there is something wrong with his own feeble mind. But he is only a lawyer, so I suppose that he can be excused. That also excuses the Chancellor of the Exchequer.
The Budget has done nothing for anybody in its impact on transport. It will increase the fares on trains, boats, aeroplanes and buses; I recognise that that does not rhyme, which is why the words were not used by Burt Bacharach.
The Budget will increase the cost of moving round the country and, as ever, the bulk of the increase will fall on the people who are worst placed to meet that cost. Well-off people will not suffer from those increases. Badly-off people will suffer from the increases, and many very badly-off people will suffer from the transport aspects of the Budget, just as they have been singled out by the Chancellor to bear the brunt of the Government's incompetence to date.
One of the most famous Tory Prime Ministers of all time, Benjamin Disraeli, was born in my constituency. He recognised—and convinced the 19th-century Tory party of this—that there was a danger of having a wholly alienated class of people who felt that they had no stake in the country. He said that it was vital that everyone was given a stake in the country.
The present Tory party is increasingly creating an alienated group, especially an alienated group of young people who feel that they have no stake in the country and


that the Government have no commitment to their future. We allow that group to grow at our peril, and at the peril of our democracy.

The Economic Secretary to the Treasury (Mr. Anthony Nelson): I reject entirely the vision of despair for this country described by the hon. Member for Holborn and St. Pancras (Mr. Dobson). His speech, which was a rumbustious conclusion to a debate that started with jobs and ended with tubes, was nevertheless an important contribution. I am the first to acknowledge the importance of railway services and transport services more generally to the people of London.
Anyone who heard the hon. Gentleman talk would not have thought that we have a planned expenditure on transport of some £17 billion over the next three years; that we had a planned investment programme of £15½ billion; that there was a core London Transport investment of £1¾ billion; plus £1·3 billion on the Jubilee line, plus the docklands extension, plus the Heathrow express. One would not have thought that £3 billion was being spent on the railway, of which £2 billion was public money.
What seems to besot the hon. Gentleman is the matter of who pays: if it is public money, it is good investment; if it is private investment, it is not on. What matters to rail users is the delivery of the services and the infrastructure. That is happening.
My right hon. and learned Friend the Chancellor of the Echequer opened his Budget statement by saying that his priority was to develop and sustain the recovery and generate a climate in which investment, jobs and growth were sustained and increased. That is at the heart of what all Conservative Members have reiterated in their speeches on the Budget. The fact that he put up front the priority of jobs along with growth was a significant signal on a day that started with a speech by my right hon. Friend the Secretary of State for Employment.
We all acknowledge the importance of getting people back to work and the unacceptability of the present high level of unemployment. Little mention was made, other than by my right hon. Friend, of the more positive effect—that there are 1·3 million more people in employment than there were 10 years ago. Nevertheless, it is important that we strive to create more job opportunities for those currently unemployed.
That is what many of the programmes and changes proposed by my right hon. and learned Friend the Chancellor should bring about. It was therefore appropriate in the debate that the first Conservative contributor was my hon. Friend the Member for Bedfordshire, South-West (Mr. Madel), who has taken such a long and abiding interest in employment issues. He raised several points during his speech, particularly with regard to the new heating arrangements, the new subsidies and grants that will be available to help people with insulation.
My hon. Friend asked about windows, and we shall certainly take on board his point. As I understand it, the scheme was not intended to apply to that, but it should, because it may cover the whole cost and leave people with more resources to pay for other insulation methods. The importance of the scheme is that it will benefit half a

million households and will be available not just to means-tested pensioners but to pensioners generally. That is a significant allocation of public money.
My hon. Friend also raised the issue of Maxwell, and as the Minister with responsibility for financial services, I shall take careful note of what he said. We are all extremely concerned with the plight of those who have lost money. That is why the Government allocated moneys on a short-term temporary basis as bridging finance until the restitution of assets can be made available. I appreciate all that my hon. Friend has said today, as I did his comments on fuel duty, the apprenticeship scheme and venture capital trusts.
The hon. Member for Motherwell, South (Dr. Bray), who has written to me a number of times, raised the interesting question of the Treasury model. He put forward, as on previous occasions, the need for policy optimisation and the need for the formulaic approach of the model to be changed to take account of the policy maximisation theories and approaches that he has expounded.
We have reviewed many of the behavioural formulae that comprise the Treasury model and we have completed that process. As the hon. Gentleman will know, there is a regular process for re-examining that. We are open to suggestions. I have asked my officials to look carefully at his representations and I have offered him the opportunity to talk directly to Treasury officials. I hope that he will avail himself of that opportunity. I suspect that he and I may be in the minority of hon. Members who have taken the opportunity to use the Treasury model that was, and I hope still is, open to Members of Parliament. I agree with the hon. Gentleman about the importance of providing a service and a way to deliver indicators and statistics that can provide a firm foundation not just for Government economic policy but for Opposition parties, allowing them to attack and question the Government at any time.
The hon. Gentleman asked why we did not have an exchange rate policy and why there was no monetary policy. My right hon. and learned Friend the Chancellor spoke of monetary matters during his statement, but foreign exchange currency rates are not a prime objective of policy. They are undoubtedly an assumption that we have to build into the mechanism, and we do that.

Dr. Bray: My central point was that if the Chancellor wants an efficient exchange rate and monetary policy—I was not questioning whether he has one—he needs to define it. That point was made by Sam Brittan in the Financial Times today. The Chancellor will find that if he does not deal with that issue now, he will have to do so at a later date, and I was offering him a way forward.

Mr. Nelson: I am grateful, but, for the reasons which I have given, that is not our approach.
My hon. Friend the Member for Erith and Crayford (Mr. Evennett) gave a warm welcome to the Budget. That he is very much in touch with his constituents was shown by the examples and representations that he quoted. I am grateful for his firm support of most of Tuesday's Budget statement. I particularly noted what he said about small businesses and about the package of benefits available, especially to elderly people. Like other hon. Friends, he mentioned the pensioner's guaranteed income bond. That is an important new facility available to those who want a regular monthly income.


The hon. and learned Member for Montgomery (Mr. Carlile) spoke about the enterprise investment scheme and the venture capital scheme. I regret the fact that he called it a confidence trick——

Mr. Alex Carlile: No, I did not.

Mr. Nelson: I immediately withdraw that accusation if that is not what the hon. Gentleman said.

Mr. Carlile: I was speaking about the pensioner's bond.

Mr. Nelson: I shall be dealing with the pensioner's bond in more detail in a moment.
The two vehicles for investment should be important contributors to the liquidity of new businesses and we shall provide front-end tax relief for the enterprise investment scheme, but it will be at 20 per cent. instead of 40 per cent. One of the problems with offering the higher marginal rate for the EIS was that it would have facilitated round-tripping for business angels—those who take an interest in the business of the company and pay themselves a salary out of it. We hope that by instead allowing relief against losses, the lower rate of relief on capital will prove to be extremely attractive.
My hon. Friend the Member for Bromsgrove (Mr. Thomason) raised an interesting but much wider issue—the short-termism of our financial institutions, of Government and of investors generally. My right hon. and learned Friend the Chancellor has asked me to conduct an inquiry into that issue over the next seven months. The industrial finance initiative is two months under way, and the objective is to look at the financing of industry by all institutions and at the liability side of the balance sheet to see whether there is the short-termism to which my hon. Friend referred and whether supply changes can be made to increase the liquidity of capital to the manufacturing base, to help to start up companies and to ensure the reinvestment of capital.
I suspect that part of the answer will be that when one has a plateau of much lower levels of inflation and interest rates, there will be much more longer-term investment and one of the key components of the extent of overdraft finance and short-term investment interest has been the seeking of quick returns against rising and high levels of inflation. If we can deliver what the Government are determined to deliver—not just lower interest rates and lower inflation but a sustaining of those low levels—there is a real prospect of behavioural changes in the attitude of investors as well as of many others.
The hon. Member for Wallasey (Ms Eagle) spoke about massive tax rises. She got very excited and referred to Treasury Ministers as rampant lunatics at the driving wheel of the economy. We in the Treasury are modest men, cautious and conservative, and I did not recognise her description of us. However, when she picked up the autobiography of my late noble Friend Lord Ridley, I realised that she had been reading too many autobiographies, which perhaps accounted for her rather colourful description of us and of others.
My right hon. and learned Friend the Chief Secretary acknowledged yesterday that the Budget announced some tax increases above those that were announced earlier this year.

Mr. Prescott: Shock, horror.

Mr. Nelson: It is a matter of fact. There is no revelation in that. It is a serious Budget to address a serious situation. As my right hon. and learned Friend has said to the people of the country, unless we face up to our prime responsibility of addressing the state of the public finances, there is little prospect of sustaining the same level of personal prosperity or public services in the future. It is because of our desire to do both that we are determined to address the state of our public finances now.
My hon. Friend the Member for Aylesbury (Mr. Lidington) spoke about transport policy—about the A418 in his constituency and about many other local and national issues that affect it. I particularly appreciate what he said about publicly financed projects such as the west coast project, the air traffic control project in Scotland and the docklands light railway. Those will be important projects, not recycled ones, and together with many other projects will bring real jobs, massive investment and lasting improvements to infrastructure.
My hon. Friend the Member for Aylesbury also welcomed the small business package of measures. He made telling points about the issue of free trade and about the importance of Europe's adopting a free trade stance and not becoming protectionist against the free trade occurring in the Pacific basin and elsewhere in the world.
The hon. Member for Hampstead and Highgate (Ms Jackson)—who cannot be with us this evening—raised some points about London transport. I have already touched on those matters.
My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) made important suggestions, particularly with regard to small businesses. I am grateful for the welcome that he gave to the package of measures that my right hon. and learned Friend announced. We will look carefully at the detailed points that he made and I will write to him about those matters.
It was left to the hon. Member for Nottingham, South (Mr. Simpson) to do what no one else on the Opposition Benches has done. Despite our pleadings and challenges to come clean, not once has any Labour Member given the true alternative Budget strategy of the Labour party, other than the hon. Gentleman. I am grateful to him, and I appreciate his honesty and his coming forward with some ideas. Are those ideas the official Labour party policy?
The hon. Member for Nottingham, South said that he was in favour of a 50 per cent. tax rate for those earning more than £50,000 a year, and that that would raise some £4 billion. He was in favour of the top whack of rates and taxes on empty commercial properties, which would raise an indeterminate amount. He said that he was in favour of slashing the defence budget—not down to the European average, which would slash £8 billion off that budget, but down to the German level, which would slash £13 billion off our defence budget. It is at least honest. The hon. Gentleman at least made a suggestion, which is more than can be said for any Opposition Front-Bench spokesman. I want to know whether that policy is more widely held.
The hon. Member for Nottingham, South said that there should be a tax not only on the flights of people on holiday but on the flight of capital. That sounds as though he is urging the reintroduction of exchange controls. Is that the official stance of the Opposition? If so, we want to know. We want to know what the Opposition estimate the effect of that would be on inward investment and the creation of jobs, for which they so often call.


My hon. Friend the Member for Surrey, East (Mr. Ainsworth) said that the deficit had built up because the Government had accepted their responsibility to the most vulnerable in our community. Goodness knows, there have been enough calls for that from the Opposition. We have delivered it to those who voted for it and have stood by them in difficult times. We are not ashamed of having fulfilled that commitment, any more than we are of saying, in improving times, that we have to address these problems.
In response to that, the hon. Member for Kingston upon Hull, East (Mr. Prescott) made an interesting but derisive speech about the Government's motives behind the Budget. He said that the Budget would do nothing for jobs. He described it as a Budget for the City casino. He derided it, holding up announcements about the success with which my right hon. and learned Friend's strategy has been received outside the House. It is good news if my right hon. and learned Friend's Budget enjoys the confidence of international and domestic investors. The fact that the stock market has risen by 150-odd points in the last week and that long-term bond yields have come down is very good news indeed. The hon. Gentleman should welcome that, and I entirely reject his approach to the City and business, which usually comes out of the closet when he is pressed.
Opposition Members' true colours shine through in the deep prejudice that they bear towards business and enterprise and the financial services institutions. A recent remark by the hon. Member for Holborn and St. Pancras went to the heart of the matter. This is what he said about business and company directors:
Yes, it's the politics of envy. We're envious of their wealth. These people are stinking, lousy, thieving incompetent scum.
That is the attitude of one of the Opposition spokesman——

Mr. Dobson: As a man who generally pursues the truth, may I put the record straight? In the newspaper piece, of which that was a snippet, I was referring to people who were very rich, had very large houses and very big cars and went on fancy holidays, but who paid their staff poverty level wages and supported the abolition of wages councils. I still regard those people as thieving scumbags.

Mr. Nelson: The hon. Gentleman must take up his argument with The Sun rather than with me, but the words are typical and descriptive.
The theme running through much of the debate has been the importance of business as the generator of jobs and employment. I hope that hon. Members on both sides of the House will acknowledge that, if we are to create greater prosperity through employment and through business, three things are essential: first, we need that elusive ephemeral trait of confidence and stability that has been lacking; secondly, we need low inflation and low interest rates, both of which have now been delivered; and, thirdly, we need as little taxation and as little regulation as possible on the income and employment-generating sector of the economy. The Budget delivers all three.
What of the Opposition's response to the Budget? What was the response of the hon. Member for Dunfermline, East (Mr. Brown) on television last night? The hon. Gentleman went, as usual, as the disciple of despair—an ambassador for Armageddon. He stood up bleakly in front

of the British people and trotted out figures that brought the country down again. He brought out a colourful bar chart showing selective dates and figures. [HON. MEMBERS: "Come on!"] Oh, yes, they were very selective figures to show manufacturing output in Britain over 14 years. What the hon. Gentleman did not tell us was that had he taken figures from a comparable period from 1982 to 1992—from trough to trough—the picture would have been entirely different. Over that period, this country has had much higher manufacturing output than Germany, France or Italy. But the Opposition do not want to know the good news. They want to run British industry and British manufacturing down.
The business package announced in the Budget was an essential generator of prosperity and hope for the small and medium-sized enterprises at this stage of recovery. Let me reiterate some parts of that package: the increase in the corporation tax thresholds of the smallest companies will benefit some 30,000 companies and the foreign income dividends scheme, depending upon the behavioural habits of income retained in companies, will be worth some £100 million.

Mr. Prescott: What about jobs?

Mr. Nelson: I will come to jobs—the profitability and cash flow of British industry are important for jobs. The uniform business rate concession will be worth some £105 million. National insurance contributions will bring a net benefit, even after the additional cost of statutory sick pay changes. The late payment proposals will have a significant impact on the cash flow of industry.
The importance of the changes is that they will add to the liquidity of, and the investment in, British industry and business. That will create jobs in large and in small companies.

Mr. Prescott: How many jobs?

Mr. Nelson: I can tell the hon. Gentleman that there are 2·7 million businesses, two thirds of which are small businesses. Three quarters of the employment in this country is in small to medium-sized enterprises. The combination of a reduction in interest rates and that package of measures will feed directly through to cash flow and give employment opportunities. There is no point in the hon. Gentleman going on about it—it is good news for British business. If he does not think so, British business does.
The Budget will not only promote enterprise and encourage investment but seek to reduce the red tape on business.

Mr. Prescott: That is waffle.

Mr. Nelson: The hon. Gentleman may think that it is waffle. I tell him to ask business men, who welcome the changes which will make a big difference to them. The changes with regard to audit requirements will benefit about 500,000 companies and will significantly reduce costs and provide employment-creating resources.
The increase in the VAT threshold to £45,000 will benefit 75,000 businesses. In addition—this has not received much comment—there is the change in arrangements for assessing national insurance contributions and income tax, which companies and businesses now have to work out laboriously; those arrangements will


be streamlined to make that work easier. I have referred to those costs to industry that prevent jobs. Our measures will release resources that will help employment.
In the final two or three minutes available, I will return to the speech of the hon. and learned Member for Montgomery, who spoke for the Liberal Democrat party. At least his party came up with an alternative Budget in November, but it seems that the Liberal Democrats have got away unscathed from a lot of the criticism which has been rightly heaped on the Labour party.
The Liberal Democrats seem to face all ways. They will promise the earth to whatever audience they speak to, and they are a soft touch for every lobby. The party will not come clean on the fact that its alternative Budget proposes 1p extra on the standard rate of income tax and 4p extra on the upper rate. The party would impose a payroll tax which would be levied at 2 per cent. There would be increases in national insurance contributions. The Liberal Democrats promise higher taxes—we know where we stand and what impact that would have on businesses. Certainly, we know that that would not help employment.
We know that, as well as being a higher-taxing party, the Liberal Democrats are also a higher spending party. One issue that party totally forgets is the amount of the deficit. It simply will not face up to the responsibility of tackling the deficit. Perhaps that is not wholly surprising in view of a speech by the right hon. Member for Berwick-upon-Tweed (Mr. Beith) in Torquay in September. He said that there was no point in being mesmerised by debt, and that there was a strong case for limiting and targeting additional borrowing. If the right hon. Gentleman thinks that, he is financially and economically illiterate. He is also irresponsible with regard to the affairs of the nation.
Like his party, the right hon. Gentleman does not have a clue about how to run the finances of the country. The party has no prudence and no responsibility when it comes to face up to the high and rising deficit. It is not prepared to announce how to deal with it.

Mr. Alex Carlile: rose—

Mr. Nelson: I am not giving way. The hon. and learned Gentleman had his innings earlier.
The Liberal Democrats go up and down the country promulgating every policy which the party thinks will appeal to whichever audience it is speaking to at any one time. It would have us believe that, on the one hand, it will face up to the responsibility of sound husbandry of public finances and, on the other hand, it will not put up taxes. In addition, it has a magic way of increasing Government spending.
The Liberal Democrats have a fraudulent policy, a confidence trick and a stance which is wholy untenable.

The electorate will look at them and examine the paucity of their proposals. The electorate will look at the black hole of the Liberal Democrats' economic policy and will understand that the party does not offer an alternative. Far from it—it offers the prospect of further job losses and a much higher tax burden. The party's preferences for second-guessing on public expenditure do not offer a way forward.
The Budget addresses the state of public finances. It does not take an easy or opportunist way out by seeking to please all opinions with money which the country cannot afford.
My right hon. and learned Friend knew when he framed the Budget judgment that, unless we were prepared to face up to tackling that deficit, we would run into the problems of a credit crunch at some stage in the future, when markets simply would not be prepared to finance a rate of borrowing of £1,000 for every man, woman and child in this country. He knew that unless we faced up to that, our public sector borrowing requirement would be an increasing proportion of our gross national product.
The vote of confidence, the money that has flowed into Britain and the jobs that will come from it come from people who recognise that we are on the right track, that we are addressing the issues and that we are living up to the necessity of reducing the amount of loans as a proportion of GNP. That is the responsible way forward. That is the way in which the Conservative party will ensure not only that we have electoral support——

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 131 (Liaison Committee),
That this House agrees with the Report [25th November] of the Liaison Committee.—[Mr. Arbuthnot.]

Question agreed to.

SITTINGS OF THE HOUSE

Ordered,
That, at the sitting on Friday 17th December, this House shall not adjourn until the Speaker shall have reported the Royal Assent to any Acts agreed upon by both Houses.—[Mr. Arbuthnot.]

EUROPEAN STANDING COMMITTEES

Ordered,
That European Community Documents Nos. 7665/93 and 8012/93, and the unnumbered Explanatory Memoranda submitted by HM Treasury on 18th October, 5th and 22nd November 1993, relating to the draft general budget for 1994, the unnumbered Explanatory Memorandum submitted by HM Treasury on 2nd November 1993, relating to a revision of the financial perspective, and European Community Document No. 7194/93, relating to the internal market, shall not stand referred to European Standing Committee B.–[Mr. Arbuthnot.]

Orders of the Day — Child Support Agency

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Arbuthnot.]

10 pm

Mr. John Spellar: This debate is about massive injustice being inflicted on families throughout Britain. Members of Parliament on both sides of the House are being deluged with complaints about the Child Support Agency. That is clear from business questions and questions to Ministers, and many of the cases are extremely disturbing, with havoc being created in the lives of thousands of ordinary families, more than 200 of whom were here today in the Grand Committee Room. It was unfortunate that the Department could not send along even one representative to address their grievances.
The national and local press have been active in campaigning on the issue and I pay tribute to the way in which they have highlighted the impact of the agency on families. I shall give examples of some of the worrying cases, but the important thing tonight is to concentrate on the principles involved.
The first thing to establish is that the agency is designed primarily to help not children, but the Exchequer. Parliamentary answers show that only about 10 per cent. of the money collected will go to the children. The other 90 per cent. will go to the Exchequer. Therefore, CSA does not stand for Child Support Agency but for Chancellor Support Agency.
We shall probably be told, rightly, by the Minister that with a £50 billion deficit the Government must be more careful than usual with public money. But in that case they must be honest with the public and describe the charge for what it is—a tax. It is a tax that is dramatically falling on certain groups of people in society and in the majority of cases it is, in effect, a divorce tax. Furthermore, the tax is retrospective, tearing up previous agreements and even court orders. It is interesting that, in the past, retrospective legislation has been looked on doubtfully by the House. But in this case we have retrospective legislation with a vengeance.
The tax will have immediate effect. When the Chancellor, who has just departed, introduced the increase in wine duty he left it until the beginning of next year before it came into effect, and similarly with other Budget measures. When the Government introduced the unified business rate, the ill-fated poll tax or the council tax, they built in transitional arrangements for individuals and local authorities. But there is no such transition for parents under this scheme. The full weight of it falls on them at once, often with dramatic increases in their obligations and often with a considerable debt arising from the delay between initial notification and the final assessment that comes through from the agency.
Nor does the agency seem to take account of payments made to the spouse during that period, so payment can be made twice over. Stopping payments in that period naturally causes enormous hardship and friction with the ex-spouse. Yet such debts can run into hundreds, even thousands of pounds in some cases, and impose a major burden on the individual and his second family. Even those who believe in the fundamental objectives of the Child Support Agency would, I am sure, accept the need for phasing in the increase because decent hard-working families, who have carefully worked out their budgets and

been prudent in taking account of their obligations, find themselves faced with a dramatic change in their circumstance which threatens to plunge them into debt.
One of the arguments, or rather alibis, put forward by the Government and some of their apologists is that the Child Support Act 1991 supposedly received general support when it was introduced and that unforeseen problems arose only later. That mythology has formed the basis of a number of articles in the quality press.
The reality is rather different. It is true that there was general support for the principle of parents supporting their children. I am sure that that view is shared by all hon. Members here tonight. However, on Second Reading of the Bill the Opposition moved an amendment declining to give it a Second Reading. More important were the perceptive reasons given for that view. The amendment was moved by my hon. Friend the Member for Oldham, West (Mr. Meacher), who said that the Bill
leaves lone parents on Income Support not one penny better off, makes lone parents worse off where they receive maintenance just above Income Support levels and thus lose access to passported benefits, allows maintenance payments to be disrupted if the absent parent defaults, does not take account of property settlements which could lead to an increase in orders for the home to be sold"—[Official Report, 4 June 1991; Vol. 192, c. 194.]
and so on. Many of those problems have come back to haunt us.
Those points were reinforced by my hon. Friend the Member for Eccles (Miss Lestor). In winding up the debate, she said:
Many separated or divorced women have negotiated with their former partners, without rancour, an arrangement whereby they forgo any maintenance but are allowed to keep the family home for themselves and their children. We must bear that in mind when we consider figures on the number of people who do not receive maintenance. The Bill could undermine that principle.
My hon. Friend referred to the question of shared access, saying:
The child may spend weekends and school holidays with its father … In such cases that is seen as the father's contributon to the child's maintenance, although no formal handing over of money is involved. Are we saying that that arrangement must change—that a formal maintenance order must be made, disrupting and undermining the understanding way in which the couple may have dealt with separation or divorce?
My hon. Friend also said, perceptively:
I fear that we are in danger of impoverishing the second family to provide for the first."—[Official Report, 4 June 1991; Vol. 192, c. 236.]
That last point has been made to me time and again, in letters and at meetings, by second wives from across the country.
It was not just the Opposition who pointed out the flaws in the Bill. The Law Society—the body for England and Wales and that for Scotland—warned against a formula that it said was too rigid and would produce harsh and arbitrary results. It also argued for the need for a transitional phase and a more flexible system. It also said that the agency was inconsistent with the principles of the Children Act 1989, which was designed to ensure that all proceedings relating to one family could be heard in the same court. The point about that is that the court can look at the wide range of different individual circumstances that do not fit into the straitjacket of a national formula administered by a faceless bureaucracy. Unfortunately, the Government did not listen and the current chaos is the result of that.
I would argue that the agency is also misdirected in its priorities. The Second Reading debate included a number


of references to targeting those fathers who had abandoned partners and children and were paying nothing. However, it appears that those are not the first priority of the agency—that is for new cases. They are not the second priority—that seems to be where the mother is on benefit and the father is already paying maintenance. In other words, he is in a job, is fulfilling his obligations and is easily traceable. Such fathers are the soft, easily identifiable targets where the agency can show some quick and easy results and possibly earn bonuses. Those fathers evading payment appear to be only the third priority and there is already anecdotal evidence that a number of them are finding ways to get round the system.
What about the actual operation of the rigid formula, especially the way that old, clean-break orders are being ignored? As I said, that is where retrospection really comes in with a vengeance. It has caused enormous problems because no account is being taken of the transfer of the matrimonial home and, in particular, the payment of the mortgage on it. In those instances, the parent is faced with an appalling dilemma. He could pay maintenance, default on the mortgage and risk making his children homeless. One person who came to see me could not even default on his mortgage because it was with his employer and he would have lost his job. Alternatively, the father could pay the mortgage but not the maintenance and risk imprisonment. Of course, if he were a police officer, he would not have even those options as he would lose his job for being in breach of his conditions of service. That is the stark prospect facing many serving officers, a number of whom were at the meeting today and have been at other meetings around the country.
The formula does not take account of debts, many of which could have arisen as a result of the divorce, or the cost of contact—particularly when the ex-partners live some distance from each other. If for financial reasons parents will see less of their children, how will that benefit the children or the country? How will that help to produce the better citizens of the next generation? The formula also does not allow for the cost of travelling to work. One couple was told that the husband did not need a car, but the wife rightly pointed out that her husband, who would have to pay the support, had to be at work by 4 o'clock in the morning because he was a long-distance lorry driver.
The agency takes account of only 50 per cent. of pension contributions. A number of categories of workers, such as those in the emergency services, make mandatory contributions, but only 50 per cent. of their value can be taken into account.
All of that shows that the agency does not live in the real world. Its monthly-paid bureaucrats have difficulty understanding that overtime is often an erratic element in a worker's pay packet. An individual may be assessed during a period when his employer is doing well and has a number of orders. When that period has ended, the worker goes back on ordinary pay but still has to contribute a substantial sum at the higher assessment.
There seems to be no understanding of the effect of assessments on second families, especially when they are caught out by the transitional provisions. A father will have to pay for the children by his first marriage, but the children that he looks after in his second marriage may not be the subject of any support. That wife, because her new husband is employed and not on benefit, is not considered a priority case for support from her first husband. Real

presure and crisis is forced on such families. The phrase used in hundreds of letters to me is, "Our world has been turned upside down". That is a real cry of misery.
In the past, courts could examine individual cases and circumstances and make judgments accordingly. They did not always reach the right decisions and there were often variations across the country. The Government would have done better, however, to set broader national priorities and categories subject to the broader wisdom of the courts—rather than have that overridden and be replaced by the CSA's rigid national formula, which is a dramatic assertion of the doctrine that the man or women in Whitehall always knows best.
There is special resentment at the £78 charge made for the agency's unwanted intrusion into family affairs. It is probably a precedent for future Government fund raising, and is about as insensitive as the policy of the Chinese who, after shooting a person, charges his or her family the price of the bullet.
Families throughout the country are facing a bleak Christmas as a result of the agency's activities. Only 56,000 families have been assessed; a further 500,000 are in the pipeline. We are seeing only the tip of the iceberg, but we already know the anguish that the agency is causing among thousands of families throughout the country. The CSA threatens second families and places them under enormous financial pressure. It reopens old wounds between divorced couples, in respect not only of financial arrangements but of access and the disposal of the former matrimonial home. The agency's activities run counter to the law on clean-break divorce and penalise those in work who are trying to build a new family life. It is unfair, and the problems are growing by the day.
The Government acknowledged public concern about the agency by establishing their own review. The Minister must accept that the CSA needs a fundamental rethink. The Government should suspend the agency's operations until it can be given fairer and better guidelines or the work returned to properly resourced courts which can deal with the problems in one go. That way we could bring hope before Christmas to thousands of despairing families not only in my constituency but throughout the country.

The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): I congratulate the hon. Member for Warley, West (Mr. Speller) on securing the debate and providing the House with an opportunity to debate this important issue. I know that it is an area in which he has great interest and I look forward to further dialogue with him on the subject on Monday.
The hon. Gentleman made a number of valuable comments with which I shall deal shortly. I am aware of the lobby this afternoon. It is not always possible for Ministers to attend, but the hon. Gentleman was kind enough in his letter to me to suggest that we sent someone along. I should like to pay tribute to my hon. Friend the Member for Broxbourne (Mrs. Roe) who went along to that meeting and put a case. It was slightly churlish of him not to mention her contribution to the proceedings.

Mr. Spellar: Will the Minister give way?

Mr. Burt: I am sorry, but no. Before I deal with the detailed matter, I should like to say a few words about


some of the fundamental issues that are at stake. It might be helpful if I were to remind the House of the purpose of the child support scheme and its provisions.
The purpose of the Child Support Agency and the Child Support Act 1991 is to obtain maintenance for children and to improve on a discretionary court-based system, which had failed to stem a decline in the payment of maintenance. The scheme is designed to ensure that, wherever possible, parents pay for the maintenance of their own children, rather than making other people, including other parents, do so through their taxes. This principle was widely welcomed, as was the move away from the courts, by hon. Members from all parties and by the relevant lobby groups when the Child Support Act was introduced in 1991, and is unchanged.
The principle is not a new one. Parental responsibility for children has long been enshrined in the law of this country. However, before 1991 fewer than one third of lone parents received maintenance from the child's other parent. By 1997 our aim is to have raised that proportion to half. Maintenance payments are a valuable income which lone parents can take with them when they return to work—which many wish to do. It will ensure that many will no longer have to rely on income support as their main source of income.
The Child Support Agency has figured prominently in the media in recent weeks. However, much of the coverage has been misleading and one-sided. The majority of comments have centred around the amounts of maintenance that absent parents are being asked to pay. Little attention has been paid to the substantial benefits for children to be derived from regular payments of maintenance.
We said in the White Paper, "Children Come First", that the new scheme was expected to increase the amounts of maintenance paid by absent parents. We repeated this in debates on the Child Support Bill and the regulations and continued to make the point on numerous other occasions. We recognised that there would be concerns expressed by absent parents, which we are now seeing as the measures begin to bite. We must, however, remember that there are two sides to every coin: yes, absent parents are being asked to pay more, but parents with care are now receiving realistic amounts of maintenance for the first time.
It is understandable that absent parents, some of whom have previously paid little or nothing towards the maintenance of their children, and others who may have paid less than the formula now requires, would not welcome being made to pay more—I understand that—but many of those absent parents, wittingly or unwittingly, made settlements which involved any maintenance that they paid being supplemented by the taxpayer. It is clearly reasonable that those absent parents who can afford to do so should make a more realistic contribution towards the cost of maintaining their children, without such taxpayers' interest.
Contrary to some media reports, the amount of maintenance to be paid is determined not on an arbitrary basis by the Child Support Agency or by faceless bureaucrats, but by a formula which was extensively discussed both inside and outside Parliament and put into legislation. It ensures that both parents, where they can afford to do so, contribute to the maintenance of their child.

It produces predictable and realistic levels of maintenance for children, taking account of the fact that they do not look after themselves, and at the same time ensuring the children share in their parents' increasing income. This important principle has not been brought out in media stories.
Another crucial factor rarely mentioned is that the vast majority of absent parents will be left with 70 to 85 per cent. of net income after paying maintenance, and those with low incomes will usually be left with an even higher percentage. In fact, it has to be said that some of the media coverage has been unbalanced, with journalists being selective, to say the least, with their presentation of the facts, very rarely taking the trouble to research fully the true circumstances of the parents with care and their children.
In the vast majority of cases in the papers, such research would reveal a parent with care and a child on benefit. One particular documentary, ITV's "World in Action", presented a series of cases, subsequently researched by The Sunday Times, which was heavily critical of the programme. The Sunday Times reporter who spoke to the ex-wives said that "World in Action" had made little effort to examine the full circumstances of the absent parents interviewed. The producer admitted to the newspaper that he had not contacted former partners.
In sensitive matters such as these—I appreciate the sensitivities on both sides—a greater willingness to present both sides of a difficult case would be better for everyone than merely putting a partial case. It would please me immensely if other sections of the media were to follow the lead of The Sunday Times so that the public could see some of the true benefits to children that are being derived from the scheme.
I recognise that people have genuine concerns about how the detail of the scheme has affected them, and I do not minimise the effect that this must have, but I have undertaken, as have my right hon. Friends the Secretary of State and the Prime Minister, to examine those concerns and we are continuing to do so. I remain convinced, however, that the basic principles of the new scheme are sound and stand up to scrutiny and are supported by the vast majority of people in the country. If it is apparent that the scheme can be improved further, I will obviously ensure that that is done.
The hon. Gentleman made some specific points and I shall do my best to cover as many as possible. He said a lot, however, and I may not be able to cover it all.
The hon. Gentleman mentioned the take-on strategy. Given the number of families involved and the need to ensure that each case is handled fairly and accurately, it was not possible to implement the new arrangements for all families overnight—but it was never our intention to do so. The agency aims to take on its full work load by the end of March 1997, but until then we have to prioritise the cases that it handles.
This year, the agency is giving the highest priority to all new cases, which have nowhere else to go. Newly divorced or separated parents who have care but do not have a court order or written maintenance agreement and who are not on benefits are no longer able to seek maintenance through the courts.
The second priority is parents with care who make a new claim to income support, family credit or disability working allowance. After these cases, the agency will cover, over the next three years of operation, cases where


the parent with care was already getting income support in April. Less than a quarter of such cases are receiving maintenance. The agency has always made it clear that, within this group, priority would be given to the parents with care receiving maintenance, and this strategy was set out in the leaflet, "Parents Who Live Apart", which was published in January 1993 and sent to all hon. Members.
The agency will also consider sympathetically, in the light of individual circumstances, any existing benefit client who seeks to be taken on early, including those where the absent parent has been avoiding paying maintenance.
The hon. Member for Warley, West mentioned targeting, which has caused much concern. It is simply not true that the agency is concentrating solely on absent parents who are already paying maintenance. We have always made it clear that all types of cases would be dealt with. The agency expects to deal with just over 1 million cases during the year, almost 640,000 of which will involve absent parents who do not currently pay any maintenance.
In the seven months up to 31 October, the agency took on 616,000 cases and estimates that more than 50 per cent.—some 330,000—were not receiving maintenance. This proportion will increase as the year progresses. I advise the hon. Gentleman that in nearly a third of assessments the absent parent has been assessed as either not liable to pay maintenance or to pay a nominal amount. That is hardly commensurate with targeting payers.
The agency has had considerable early success, which has not received the publicity that it should have, in finding missing absent parents—those parents who, unlike many others, have shirked their responsibilities and, in many cases, disappeared without trace. In the cases completed so far, it has managed to trace more than 9,000 absent parents where the parent with care did not know their whereabouts—a success rate of more than 90 per cent., which was unmatched by the previous court system.
The hon. Gentleman raised the issue of clean-break settlements. Much attention has been paid to what are widely known as clean breaks. There can be no clean break between parents and children, and there never has been under the court system. It has always been possible for the parent with care to return to the court to reopen the need for child maintenance if circumstances changed.
Where a parent with care has gained sizeable equity in a property, the true effect in most cases being dealt with has been that she has acquired a material asset while the taxpayer has supported her children's basic living costs. It must be remembered that for many parents with care this transfer of property is not one of a free-standing asset but one with an associated level of debt through the mortgage. In those cases where the parent with care is reliant on income support, the interest on this debt falls to be paid by the taxpayer.
Advocates of that approach overlook a real problem. In the vast majority of such cases, there is insufficient information to determine what proportion of any settlement was attributable to spousal maintenance, which is not dealt with by the agency, and what is attributable to child maintenance, which is dealt with by the agency.
It should be emphasised that the child support formula provides for the practical consequences of a clean break settlement because it allows for the absent parent's housing costs. For example, in not taking any equity from the family home the absent parent may well incur greater

expenses in re-establishing himself in a new home. The formula allows for those costs, and the amount of maintenance that he will be asked to pay will thus be reduced.
The hon. Gentleman made the allegation that the Child Support Agency only benefits the Treasury. That is not the case. I emphasise, first, that the services of the agency are available to parents who are not in receipt of any benefit, so it is wrong to suggest that the scheme is purely a money-saving measure. The question which should be asked is not, "Should we have introduced an Act to save the taxpayer money?" but rather, "Should the taxpayer have been involved in the first place?" Where the absent parent can afford to pay, I think that the answer should be no.
The hon. Gentleman mentioned the subject of second families and the difficulties caused to them. I understand his worries. The formula includes, as he is aware, a protected income calculation, which is designed to ensure that absent parents are not asked to pay maintenance at a rate which would take them down to income support levels. That is an especially important safeguard for absent parents with second families. The calculation takes account of the expenses, not only of the absent parent, but of his new partner and any stepchildren. It is in that part of the calculation that the absent parent's new partner's income is taken into account, because the entire household's income and expenses are compared to ensure that they keep a margin of income above income support levels. That calculation can only reduce the amount of maintenance that an absent parent is required to pay. Absent parents will never be required to pay full maintenance to the first family if it would reduce the living standards of the second family below the protected level. To that extent the second family takes precedence over the first.
The hon. Gentleman has mentioned the issue of phasing. As he is aware, some absent parents will have the formula amount introduced in two steps to help them adjust. He is aware of the provisions. It has been said that that matter could be reconsidered and that is one of the subjects that the current Select Committee is considering.
The hon. Gentleman mentioned the important issue of policemen, service men and others and I am anxious to make a comment about that. We have spoken to the Home Office and the Minstry of Defence about that issue. They are quite categorical. Policemen and service men will not lose their jobs because of increased liability for child maintenance. Counselling will be available for individuals who experience difficulty in managing debts and help will be given in dealing with creditors. The police force and the services are well aware of the problems that can arise from an unexpected debt and it is not fair to suggest that in all those cases, or in any of those cases necessarily, people will lose their jobs solely because of the matter that the hon. Gentleman has mentioned.
The hon. Gentleman also mentioned expenses. It has been suggested that the assessment formula should take account of the absent parent's expenses, such as the costs of travel to work, contact with children and debts. The formula does make provision for essential living expenses and, additionally, absent parents are left with a significant proportion of their net income after paying maintenance. That ensures that they have choices about how to spend their disposable income.
However, as I put as strongly as I could to the Select Committee, we do not think it right to allow for other


expenses in the formula, as that gives them precedence over the basic needs of their children. To do so would create pressure for more and more expenses to be defined as essential and for child maintenance to be pushed further and further down the list of priorities. The ultimate result would be a return to the unrealistically low sums which were common under the previous system and indeed the conditions that inspired the House to make a change from the previous system, because it did not adequately deal with the situation affecting the children.
The hon. Member has again called for the suspension of the operations of the Child Support Agency, as he did last week. Even if it were warranted—which it is not—to suspend the operations of the Child Support Agency, it completely ignores the impact of such action on many thousands of children, often in situations in which no maintenance had previously been paid. If the hon. Gentleman thought through the consequences of such a suggestion, he would realise that it would result in great hardship. Many parents with care would find that established maintenance payments would suddenly cease, and many would, therefore, be forced back to benefits. I am afraid that only a failure to understand both sides of the issue could have led the hon. Gentleman to make such a call.
I shall briefly make two or three final points. First, as to

shared access, where an absent parent looks after a child for a period, the hon. Gentleman knows that that is catered for in the formula. Secondly, in relation to the question of overtime, the agency well understands that earnings can fluctuate and it can take account of that. Indeed, one of the benefits of the previous system was that it was difficult to go back to court to deal with variation orders. Under the new system, that can be done and it can be done without any increase in fees. If one went near a court in the past and one was charged new fees by a lawyer, it would turn out an awful lot more expensive than the fees charged by the agency.
Lastly, the hon. Gentleman made arguments about the support offered by his party, in one way or another, for the principle of the Child Support Act 1991. As far as I am aware, the Third Reading of the Act was not opposed by the Opposition. The Labour party conference of 1992 urged repeal; the Labour party conference of 1993 did not urge repeal. I am still not quite sure whether the Labour party has now changed its view in any way.
The hon. Gentleman has advocated a return to a court-based system in what he said at the end of his speech. If that is now the view of Opposition Front Benchers, I would be very interested to hear it.

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.